TC 425 
. C6 P3 
1907a 
Copy 2 





Gass 

Book 















Cc. ft 3 

59th Congress, 

2d Session. 


SENATE. 


Document 
No. 212. 


IMPERIAL VALLEY OR SALTON SINK REGION. 



MESSAGE 

FROM THE 

PRESIDENT OF THE UNITED STATES, 

RELATIVE TO 

9 

THE THREATENED DESTRUCTION BY THE OVERFLOW OF THE 
COLORADO RIVER IN THE SINK OR DEPRESSION KNOWN AS 
THE IMPERIAL VALLEY OR SALTON SINK REGION. 


January 12, 1907.—Read; referred to the Committee on Foreign Relations, 
and ordered to be printed, with accompanying maps. 


To the Senate and House of Representatives: 

The governor of the State of California and individuals and com¬ 
munities in southern California have made urgent appeals to me to 
take steps to save the lands and settlements in the sink or depression 
known as the Imperial Valley or Salton Sink region from threatened 
destruction by the overflow of Colorado River. The situation ap¬ 
pears so serious and urgent that I now refer the matter to the Con¬ 
gress for its consideration, together with my recommendations upon 
the subject. 

Briefly stated, the conditions are these: The Imperial Valley, so- 
called, in San Diego County, Cal., includes a large tract of country 
below sea level. Southeast of the valley and considerably above its 
level is the Colorado River, which flows on a broad, slightly elevated 
plane upon which the river pursues a tortuous course, finally entering 
the Gulf of California. The lands in Imperial Valley are 200 feet 
or more below the level of Colorado River. Down as far as the inter¬ 
national border they are protected from inundation by low-lying 
hills. South of the boundary, in the Republic of Mexico, the hills 
cease abruptly, and only the broad low mud banks of the river pro¬ 
tect the valley from being converted into an inland sea or lake. In 
order to get any water to this vast tract of fertile but desert land, 
or, on the other hand, to protect it from too much water, works of 
supply or of protection must be built in Mexico, even though they 


* • * 


• V 

















2 


IMPERIAL VALLEY OR SALTON SINK REGION. 


' C<b A 3 

\<\ O'! 


may tap the river in the United States. The United States can 
neither aid nor protect the interests of its citizens without going upon 
foreign soil. 

Nature has through many centuries protected this great depression 
from overflow, but the restless river, constantly shifting, has annu¬ 
ally threatened to break through the banks. Only a little human aid 
was needed to cause it to do so. 

This condition has been long known, and through many years 
schemes have been discussed either to convert the Salton Sink area 
into a lake or to irrigate the desert lands below sea level by making 
a cut in Mexico through the west bank of the Colorado River. It was 
also well understood that if the cut in the bank was not carefully 
guarded the river would quickly get beyond control. Finally, after 
many plans had been tentatively tried, the California Development 
Company, a New Jersey corporation, actively undertook the work. 
To insure the safety of Imperial Valley the head of the canal on the 
river was first placed on United States territory near where the river 
was bounded by hills. The canal then swung southwest and west 
awav from the river through Mexican territory to connect with 
natural depressions leading to the valley and back into the United 
States. The organizers of this company, in order to carry on the 
work in Mexico, caused to be created a subsidiary company in Mexico 
acting under Mexican laws. Concessions were granted to this com¬ 
pany by the Mexican Government, and provision was made for the 
employment of a Mexican engineer, to be designated by that Govern¬ 
ment, in order to see that the work was properly carried out. The 
dangerous character of the attempt was thus recognized in this con¬ 
cession. 

The California Development Company began its work by making 
representations to possible settlers of the great benefits to be derived 
by them by taking up this land. A large amount of money which 
might have been used in needed works was expended in advertising 
and in promoting the enterprise. The claims were not only extrava¬ 
gant, but in many cases it appears that willful misrepresentation was 
made. Many of the operations of this company and of its subsidiary 
organizations tended to mislead uninformed settlers. At first the 
success of the company was great, and it disposed of water rights to 
settlers at prices sufficiently large to obtain a fair revenue either in 
cash or in securities of value. 

The money thus obtained from settlers was not used in permanent 
development, but apparently disappeared either in profits to the 
principal promoters or in the numerous subsidiary companies, which 
to a certain extent fed upon the parent company, or served to obscure 
its operations, such as a construction company, a company to promote 
settlement, and a company to handle the securities of the various 
other corporations. The history of these deals is so complicated that 
it would require careful research, extending through many months, to 
unravel the devious ways by which money and valuable securities 
have disappeared. In brief, it is sufficient to state that the valuable 
considerations which were received for water rights were obviously 
not used in providing necessary and permanent works for furnishing 
water to the settlers. 

The whole enterprise and the spirit of those promoting it, as well 
as of the numerous smaller speculators attracted to the subsidiary 


Lo 


IMPERIAL VALLEY OR SALTON SINK REGION. 3 

organizations, were of the most visionary character. Actual invest¬ 
ments made have been small in proportion to estimates of wealth 
which appeared to be possible of realization. 

The company entered upon its construction work with large plans, 
but with inadequate capital. All of its structures for the control 
and distribution of water were temporary in character, being built 
of wood, and of the smallest possible dimensions. Through the ef¬ 
forts thus made a large amount of land was brought under cultiva¬ 
tion, and at one time it was reported that over 100.000 acres were be¬ 
ing more or less irrigated. 

The first heading of the canal of the California Development Com¬ 
pany was in the United States, immediately north of the Mexican 
border. It was found, however, after a time, that the heading on the 
United States side of the line did not give a grade to furnish suffi¬ 
cient flow of water, and, after headings had been opened at other 
points without successful results, a cut in the river bank was made 
4 miles farther south in Mexican territory. This gave the water a 
shorter and steeper course toward the valley. The making of this cut 
in a bank composed of light alluvial soil above a depression such as 
this without controlling devices was criminal negligence. This short 
cut on Mexican soil was made in the fall of 1904. It was gradually 
eroded by the passage of the water, and in the spring of 1905 the 
floods of the Colorado River entering the artificial cut rapidly 
widened and deepened it until the entire flow of the river was turned 
westerly down the relatively steep slope into the Imperial Valley, 
and thence into what is known as Salton Sink or Salton Sea. 

After the mischief became apparent strenuous efforts were made 
by the California Development Company to close the break, but these 
were without success. Finally the Southern Pacific Company, find¬ 
ing its tracks imperilled and traffic seriously interfered with, ad¬ 
vanced money to the California Development Company, received as 
security a majority of the shares of the company, and thus took 
charge of the situation. 

By means of the facilities available to the Southern Pacific Com¬ 
pany the break in the west bank of the Colorado River was closed 
on November 4, 1906. A month later, however, a sudden rise in the 
river undermined the poorly constructed levees immediately south of 
the former break and the water again resumed its course into the 
Salton Sea. 

The results have been highly alarming, as it appears that if the 
water is not checked it will cut a very deep channel which, progres¬ 
sing upstream in a series of cataracts, will result in conditions such 
that the water can not be diverted by gravity into the canals already 
built in the Imperial Valley. If the break is not closed before the 
coming spring flood of 1907 it appears highly probable that all of 
the property values created in this valley will be wiped out, includ¬ 
ing farms and towns, as well as the revenues derived by the Southern 
Pacific Company. Ultimately the channel will be deepened in the 
main stream itself up to and beyond the town of Yuma, destroying 
the homes and farms there, the great railroad bridge, and the Govern¬ 
ment works at Laguna dam, above Yuma. 

It is difficult to estimate how many people have settled in the 
valley, the figures varying from 6,000 persons up to as high as 10,000. 
It is also difficult to ascertain how much money has been actually 


4 


IMPERIAL VALLEY OR SALTON SINK REGION. 


spent in real improvements. Town lots have been laid off, sold at 
auction, and several hundred buildings erected in the various small 
settlements scattered throughout the tract. The greater part of the 
public land has been taken up under the homestead or desert entry 
laws, and sufficient work has been done to secure title. Some crops 
have been raised, and under favorable conditions the output in the 
near future will be large. 

The actual amount of tangible wealth or securities possessed by the 
settlers to-day upon which money can be raised is believed to be very 
small. Nearly all individual property has been expended in securing 
water rights from the California Development Company, or from the 
other organizations handling the water supply and controlled by this 
company. It is evident that the people have slender resources to fall 
back upon, and in view of the threatened calamity are practically 
helpless. The California Development Company is also unable to 
meet the exigency. The obligations assumed by the sale of water 
rights are so great that the property of the company is not adequate 
to meet these obligations; in other words, a gift of the visible prop¬ 
erty of this company and of its rights would not be a sufficient offset 
to the assumption of its liabilities. Nevertheless, the people in their 
desperation were reported as trying to issue and sell bonds secured by 
their property in order to give to the California Development Com¬ 
pany a million dollars to assist in repairing the break. 

The complications which have arisen from the transfer of the 
property and the involved relations of the California Development 
Company with its numerous subsidiary companies are such that the 
United States would not be justified in having any dealings with this 
company until the complications are removed and the Government 
has a full understanding of every phase of the situation. 

It has been stated above that the California Development Company 
has not the financial strength to repair the break and to restore the 
bank of the Colorado River to such permanent condition that a similar 
occurrence can not happen. It is further understood that the South¬ 
ern Pacific Company, having expended $2,000,000 or more for the 
protection of its interests, declines to furnish more money to the Cali¬ 
fornia Development Company to save the Imperial Yallev, beyond con¬ 
trolling the present break in the river bank. The owners of the prop¬ 
erty in Imperial Valley, both formers and townspeople, together with 
the Southern Pacific Company and the California Development Com¬ 
pany, have combined to call upon the Government for a contribution 
to assist the California Development Company to the extent of erect¬ 
ing permanent works to insure protection for the future. 

If the river is not put back and permanently maintained in its 
natural bed the progressive back cutting in the course of one or two 
years will extend upstream to Yuma, as before stated, and finally 
to the Laguna dam, now being built by the Government, thus wiping 
out millions of dollars of property belonging to the Government and 
to citizens. Continuing farther, it will deprive all the valley lands 
along the Colorado River of the possibility of obtaining necessary 
supply of water by gravity canals. 

The great Yuma bridge will go out, and approximately 700,000 
acres of land as fertile as the Nile Valley will be left in a desert condi¬ 
tion. What this means may be understood when we remember that 
the entire producing area of southern California is about 250,000 


IMPERIAL VALLEY O^SALTON SINK REGION. 


5 


acres. A most conservative estimate after full development must 
place the gross product from this land at not less than $100 per acre 
per year, every ten acres of which will support a family when under 
intense cultivation. If the break in the Colorado is not permanently 
controlled the financial loss to the United States will be great. The 
entire irrigable area which will be either submerged or deprived of 
water in the Imperial Valley and along the Colorado River is capable 
of adding to the permanent population of Arizona and California at 
least 350,000 people, and probably 500,000. Much of the land will be 
worth from $500 to $1,500 per acre to individual owners, or a total of 
from $350,000,000 to $700,000,000. 

The point to be especially emphasized is that prompt action must be 
taken, if any; otherwise the conditions may become so extreme as to be 
impracticable of remedy. The history of past attempts to close the 
break in the river bank has shown that each time, through delay, the 
work has cost double or treble what it would have cost had prompt 
action been taken. It is probable now that with an expenditure of 
$2,000,000 the river can be restored to its former channel and held 
there indefinitely; but if this action is not taken immediately, several 
times this sum may be required to restore it, and possibly it can not be 
restored unless enormous sums are expended. 

At the present moment there appears to be only one agency equal 
to the task of controlling the river, namely, the Southern Pacific 
Company, with its transportation facilities, its equipment, and con¬ 
trol of the California Development Company and subsidiary com¬ 
panies. The need of railroad facilities and equipment and the 
international complications are such that the officers of the United 
States, even with unlimited funds, could not carry on the work with 
the celerity required. It is only the fact that the officers of the 
Southern Pacific Company, acting also as officers of the California 
Development Company, have been able to apply all its resources for 
transportation, motive power, and the operation of the road that 
has made it possible to control the situation to the extent which 
they have already done. The Southern Pacific Company is now 
reported to be working strenuously to fill the break through which 
the Colorado River is flowing westward to the Salton Sea, and in 
repairing and building levees to keep out the high water due next 
M arch. This work will be more or less of a temporary character. 
Further construction is necessary and all temporary works must be 
replaced by permanent structures. It is estimated that for this 
additional work $2,000,000 should be available. The question as to 
what sum, if any, should be paid to the Southern Pacific Company 
for work done since the break of November 4, 1906, is one for future 
consideration; for work done prior to that date no claim can be 
admitted. 

But one practicable course is now open for consideration. 

The Southern Pacific Company must continue its work to close 
the break and restore the river to its proper channel. The United 
States can then take charge, making the protective works permanent 
and providing for their maintenance. 

It is not believed that a free gift of this money should be made, as 
by its investment the stability of property of great value will be 
secured and the increase in land values throughout the Imperial Val- 


6 


imperial valley or salton sink region. 


ley will be sufficient to justify the provision that this money should 
be returned to the Government. 

The Reclamation Service should be authorized to take steps at 
once for the construction of an irrigation project, under the terms 
of the reclamation act. for the lands in the Imperial Valley and in 
the lower Colorado River Valley. The Service should be in position 
to proceed actively with the organization of the project and the con¬ 
struction of the works as soon as the conditions in regard to the 
protection of the valley against overflow will justify expenditures 
for this purpose. 

To accomplish this, the United States should acquire the rights of 
the California Development Company and its subsidiary corpora¬ 
tions in the United States and Mexico upon such reasonable terms 
as shall protect the interests of the Government and of the water 
users. The United States should obtain by convention with Mexico 
the right to carry water through that country upon reasonable 
conditions. 

Most of the land in the Imperial Valley has been entered under the 
terms of the desert land act or the homestead laws, and title has not 
passed out of the United States. 

The construction work required would be: The main canal, some 
60 miles in length, from Laguna dam into the Imperial Valley; the 
repair and partial reconstruction of the present distribution system 
in the valley and its extension to other lands, mainly public; diversion 
dams and distribution systems in the Colorado River Valley, and pro¬ 
vision for supplementing the natural flow of the river by means of such 
storage reservoirs as may be necessary. This would provide for the 
complete irrigation of 300,000 acres in the Imperial Valley and for 
400,000 acres additional in the United States in the valley of the Colo¬ 
rado in Arizona and California. 

The reclamation fund now available has been allotted for projects 
under construction, and the anticipated additions to the fund for the 
next few years will be needed to complete these projects. It will 
therefore be impossible to construct a reclamation project for the 
Imperial Valle} 7 with the funds now in hand, and it will be necessary 
for Congress to make specific appropriation for this work if it decides 
to undertake it. 

Such appropriation would be expended for a project carried out 
under all the provisions of the reclamation act, requiring the return 
to the reclamation fund of the cost of construction and maintenance 
of the irrigation works, and there should be the further requirement 
that the cost of permanent protective works and their maintenance be 
repaid. 

The interests of the Government in this matter are so great in the 
protection of its own property, particularly of the public lands, that 
Congress is justified in taking prompt and effective measures toward 
the relief of the present situation. No steps, however, should be 
taken except with a broad comprehension of the magnitude of the 
work and with the belief that within the next ten years the works 
and development will be carried out to their full proportions. 

The plan in general is to enter upon a broad, comprehensive scheme 
of development for all the irrigable land upon Colorado River with 
needed storage at the headwaters, so that none of the water of this 
great river which can be put to beneficial use will be allowed to go 


IMPERIAL VALLEY OR SALTON SINK REGION. 


7 


to waste. The Imperial Valley will never have a safe and adequate 
supply of water until the main canal extends from the Laguna dam. 
At each end this dam is connected with rock bluffs and provides a 
permanent heading founded on rock for the diversion of the water. 
Any works built below this point would not be safe from destruction 
by floods and can not be depended upon for a permanent and relia¬ 
ble supply of water to the valley. 

If Congress does not give authority and make adequate provision 
to take up this work in the way suggested, it must be inferred that it 
acquiesces in the abandonment of the work at Laguna and of all 
future attempts to utilize the valuable public domain in this part of 
the country. 

Theodore Roosevelt. 

The White House, January 12,1907. 


Department or the Interior, 

United States Geological Survey, 

I Y ashing ton, D. C., January 10, 1907. 

Sir : In accordance with your oral request, I have the honor to sub¬ 
mit the following statement in respect to the Colorado River-Salton 
Sea situation in southern California. 

It may be assumed that one of three courses can be followed : 

First. Let the entire matter alone for the individuals and corpora¬ 
tions to handle as best they may. 

Second. Request an appropriation of $2,000,000 from Congress and 
the privilege from Mexico to expend this money largely in Mexican 
territory in constructing and maintaining permanent works of pro¬ 
tection along the west bank of the Colorado River. 

Third. Have the Government take entire charge of the situation, 
develop its own lands, and protect the people in the Imperial Valley 
and in the vicinity of Yuma and in the valleys along Colorado River. 

The third course is preferable, because it will bring about ulti¬ 
mately a full development of the public lands and of the resources of 
the country, and will add to its permanent population and prosperity. 
This course will involve the obtaining of appropriations of funds 
from time to time, which will ultimately be repaid. It will also be 
necessary to obtain from Mexico the right to carry a canal through 
Mexican territory and build protective works on the Mexican side of 
the boundary. It may also be necessary to make some concessions of 
w r ater required for Mexican lands. We have heretofore estimated that, 
in the event the United States Government constructs the works, 
water to the extent of 600,000 acre-feet per annum could be furnished 
for Mexican lands, which would irrigate about 150,000 acres. If this 
is done, provision ought to be made for the repayment of the proper 
proportion of the expenditure necessary to furnish the water on the 
same basis as for lands in the United States. 

In this connection it may be stated that full control and storage of 
the Hood waters of Colorado River will result in obtaining an ade¬ 
quate supply of water, not only for lands within the United States, 
but also for those in the Republic of Mexico, which can be reached by 
gravity canals from Colorado River. The average annual flow of 
Colorado River is approximately 11,000,000 acre-feet, and the en¬ 
tire demand for irrigable land which can be reached by gravity 



8 


IMPERIAL VALLEY OR SALTON SINK REGION. 


along the course of the river in the United States will proba¬ 
bly not be more than 8,000,000 acre-feet. To make this avail¬ 
able, however, storage must be provided at the headwaters. There 
will thus be ample water to supply at least 150,000 acres additional 
in Mexico. 

Unless Congress is prepared to enter upon a policy of protecting the 
lands and property of the United States, and ultimately developing 
a comprehensive system of reclamation, it does not seem to be wise to 
go into the subject further at present. 

In the event of Congress deciding not to do anything it will be nec¬ 
essary to defer indefinitely the work on the Yuma project and the 
construction of the Laguna Dam, on which upward of $1,000,000 
have already been spent. It will not be wise to make further ex¬ 
penditures which will be jeopardized through failure to retain the 
river in its proper channel. If the river is put back in its channel 
by private enterprise, it will presumably be done in such a way 
that the relief will be of a temporary character, and the irregularly 
occurring floods will in a short time make another breach in the 
banks at the existing points of weakness. 

If the work of restoring the river to its proper channel should be 
undertaken by private parties in Mexico, there should be obtained 
from Mexico some assurance that the break will be patrolled and 
guarded at all times, and that the individuals or corporations own¬ 
ing the lands and the works will be bonded in some effective way to 
maintain such protective works and also be required to show that 
they haAT the ability, financial and otherwise, to repair any break 
which may occur before it reaches dangerous proportions. 

It is desirable to consider the advisability of asking Mexico to 
give assurance that no future artificial cutting of the Avest bank of 
the Colorado River will be alloAved for any purpose whatever at 
any point where the interests of the United States may be jeopard¬ 
ized. It is belieA r ed that any cutting in this bank of soft mud at 
any such points will sooner or later be a source of danger and dis¬ 
aster to the Imperial Valley and to the lands along the loAver Col¬ 
orado. No such artificial cutting should therefore be permitted. 
On the contrary, levees should be constructed and maintained the 
entire distance needed for this protection, and so effectively located 
and built that the river can not possibly break OA-er or through them. 
Any water taken from Colorado River for the irrigation of any tract 
lying Avest of this water boundary should be diverted only at points 
where the headworks can be founded upon solid rock. 

Very respectfully, 


The President, 

The White House. 


Chas. D. Walcott, Director. 


List of accompanying papers. 

1. December 13, 1906. Telegram, E. II. Harriman to President. 

2. December 15, 1906. Telegram, President to E. II. Harriman. 

3. December 19, 1906. Telegram, E. II. Harriman to President. 

4. December 20, 1906. Telegram, President to E. H. Harriman. 

5. December 20, 1906. Telegram, E. H. Harriman to President. 

6. December 20, 1906. Telegram, President to E. II. Harriman. 



IMPERIAL VALLEY OR SALTON SINK REGION. 


9 


7. December 28, 1906. Letter, Charles D. Walcott to Epes Randolph. 

8. January 4, 1907. Telegram, Epes Randolph to Charles D. Walcott. 

9. December 31, 1906. Telegram, Charles D. Walcott to Epes Randolph. 

10. January 3, 1907. Telegram, Epes Randolph to Charles D. Walcott. 

11. December 26, 1906. Letter, W. J. Doran, treasurer California Development 
Company, to A. E. Chandler, engineer, United States Reclamation Service. 

12. January 2, 1907. Telegram, President to E. II. Harriman. 

13. January 2, 1907. Telegram, E. H. Harriman to President. 

14. January 2, 1907. Telegram, E. H. Harriman to President. 

15. January 3, 1907. Telegram, President to E. H. Harriman. 

16. January 3, 1907. Telegram, E. H. Harriman to President. 

17. January 7, 1907. Telegram, E. H. Harriman to President. 


New York, December 13 , 1906. 

The President : 

Referring to the overflow of the Colorado River into Imperial 
Valley, California, I am advised that some 800 feet of levee in the 
river bottom has been washed out and a new channel, which is 
rapidly deepening, has been cut and is now carrying about one-fourth 
of the discharge of the river to the Salton Sink, and within a few 
days will probably be carrying the entire discharge of the river. 
Two days ago the river was beyond control by falling [filling?], but 
could be dammed again within sixty or seventy days on the plan 
which proved successful in November. This, however, our engineers 
consider would be useless unless the levees are provided with sub¬ 
surface protection at least 15 feet deep, and such protection could be 
provided by digging a trench 8 to 10 feet wide and 15 feet deep, 
filling it with puddle, or by driving a row of interlocking sheet piling 
longitudinally through the earthen levees. About 20 miles of this 
construction would be necessary and would cost approximately $3,- 
000,000, to which should be added about $300,000 to $400,000, which 
would close up the break and restore the levees, but would not put 
them in condition to afford permanent relief and security. 

Up to the present time the Southern Pacific has expended about 
$1,000,000 for work on the Colorado River to protect itself and the 
settlers, and in addition has expended in moving and protecting its 
main line and tracks in the Salton basin, up to July 31 last, $618,000 
additional, to which must be added very large expenditures made in 
August, September, October, and November, the amount of which has 
not yet been reported, but, with the $618,000 named, will approximate 
$1,000,000 spent in moving and protecting tracks and in direct con¬ 
tribution of material, labor, train service, etc., in closing up the break. 

If the overflow is not entirely checked, the Imperial Valley will be 
flooded, depriving several thousand settlers of homes and flooding a 
large area of irrigable land that will be speedily settled, the actual 
loss to farmers and towns being estimated at $3,000,000, while the 
Government dam at Laguna, on which approximately $2,000,000 have 
been expended, will be destroyed, and some 50,000 acres of irrigable 
land tributary to Yuma and 350,000 additional acres that might be 
irrigated can not be irrigated if the river is allowed to cut a canyon 
back through them, as it will inevitably do unless it is controlled, and 
the town of Yuma will also suffer severely. 

In view of the above it does not seem fair that we should be called 
upon to do more than join in to help the settlers. 


E. H. H ARRTMAN. 



10 


IMPERIAL VALLEY OR SALTON SINK REGION. 
[Draft of telegram sent to the President.] 


Washington, December 15 , 1906. 

Mr. E. H. Harriman, 

lW Broadway , New York: 

Referring to your telegrams of December 13,1 assume you are plan¬ 
ning to continue work immediately on closing break in Colorado 
River. I should be fully informed as to how far you intend to pro¬ 
ceed in the matter. 


[Telegram.] 

New York, December 19 , 1906. 

The President, Washington: 

Further referring to your telegram of the 15th instant, our engi¬ 
neers advise that closing the break and restoring the levees can be 
most quickly and cheaply done, if the work is undertaken immedi¬ 
ately, at a cost of $300,000 to $350,000. The Southern Pacific Com¬ 
pany having been at an expense of about $2,000,000 already, it does 
not feel warranted in assuming this responsibility and the additional 
expenditure which is likely to follow to make the work permanent 
besides the expenditure which the company is already undergoing to 
put its tracks above danger line. We are willing to cooperate with 
the Government, contributing train service, use of tracks and switches, 
use of rock quarries, train crews, etc., and the California Development 
Company will contribute its engineers and organization, the whole 
work to be done under the Reclamation Service. Can you bring this 
about ? 

E. H. Harriman. 


[Telegram.] 


Washington, December 20, 1906. 

Mr. E. H. Harriman, 

120 Broadway , New York: 

Replying to yours of 19th, Reclamation Service can not enter 
upon work without authority of Congress and suitable convention 
with Mexico. Congress adjourns to-day for holidays. Impossible 
to secure action at present. It is incumbent upon you to close break 
again. Question of future permanent maintenance can then be taken 
up. Reclamation engineers available for consultation. That is all 
the aid that there is in the power of the Government to render, and 
it seems to me clear that it is the imperative duty of the California 
Development Company to close this break at once. 

The dangers ultimately due only to the action of that company 
in the past in making heading completed in October, 1904, in Mexi¬ 
can territory. The present crisis can at this moment only be met 
by the action of the company which is ultimately responsible for it 
and that action should be taken without an hour’s delay. Through 




IMPERIAL VALLEY OR SALTON SINK REGION. 


11 


the Department of State I am endeavoring to secure such action by 
the Mexican Government as will enable Congress in its turn to act. 
But at present Congress can do nothing without such action by the 
Mexican Government. 

I his is a matter of such vital importance that I wish to repeat 
that there is not the slightest excuse for the California Development 
Company waiting an hour for the action of the Government. It is 
its duty to meet the present danger immediately, and then this Gov¬ 
ernment will take up with it, as it has already taken up with Mexico, 
the question of providing in permanent shape against the recurrence 
of the danger. 

Theodore Roosevelt. 


[Telegram.] 

New York, December 20, 1906. 

The President, IF ashing ton, D. G 

Replying to your telegram of this date, you seem to be under the 
impression that the California Development Company is a Southern 
Pacific enterprise. This is erroneous. It had nothing to do with its 
work or the opening of the canal. We are not interested in its 
stock, and in no way control it. We have loaned it some money to 
assist in dealing with the situation. What the Southern Pacific 
Company has done was for the protection of the settlers as well as 
of its tracks, but we have determined to move the tracks onto high 
ground anyway. However, in view of your message I am giving 
authority to the Southern Pacific officers in the West to proceed at 
once with efforts to repair the break, trusting that the Government, 
as soon as you can procure the necessary Congressional action, will 
assist us with the burden. 

E. H. Harriman. 


[Telegram.] 

Washington, December 20, 1906. 

Mr. E. H. Harriman, 

120 Broadway, New York, N. Y.: 

Am delighted to receive your telegram. Have at once directed the 
Reclamation Service to get into touch with you, so that as soon as Con¬ 
gress reassembles I can recommend legislation which will provide 
against a repetition of the disaster and make provision for the equita¬ 
ble distribution of the burden. 

Theodore Roosevelt. 


December 28, 1906. 

Dear Sir: On December 20 the President of the United States, 
acting upon requests made by Mr. E. H. Harriman and by citizens of 
southern California, instructed me to formulate a plan covering the 
improvement of conditions on Colorado River. 





12 


IMPERIAL VALLEY OR SALTON SINK REGION. 


The President states in his note that— 

Mexico lias behaved admirably, and lias expressed a willingness to do anything 
within reason which we desire in the Colorado River break matter. Of course 
Mexico is not to do the work. This work must be done by Harriman & 
Co., as I pointed out in my telegram to him. We should be prepared to put a 
definite request before Congress immediately upon its reassembling. To do 
that, I must of course know just what separate or joint responsibilities there 
should be as regards this country and the California Development Company. 
Please formulate a plan at the earliest possible moment, submitting it to the 
State Department, so that Mexico can be fully informed. 


Briefly reviewed, the history leading up to this matter is, as I 
understand it, as follows: 

On November 6, 1906, the California Development Company suc¬ 
ceeded in closing the gap previously made by them in the west bank 
of Colorado River, 4 miles south of the international boundary, all 
of the water being then turned back toward the Gulf. 

On December 7 the flood in Colorado River passed under the 
levees immediately south of the break, and in a few days the entire 
flow of the river was again diverted from it proper channel. 

On or about December 12 Mr. E. H. Harriman, president of the 
Southern Pacific Company, communicated with President Roosevelt, 
calling attention to the losses which might ensue if this break was 
not promptly closed, and stating that “ It does not seem fair that we 
should be called upon to do more than join in to help the settlers/' 

On December 15 the President, referring to Mr. Harriman’s request 
of December 13, stated: 

I assume you are planning to continue work immediately on closing the 
break hi Colorado River. I should be fully informed as to how far you intend 
to proceed in the matter. # 


At about the same time messages were sent to the President and to 
Representatives in Congress from people in the Imperial Valley, stat¬ 
ing, in effect, that the California Development Company is bankrupt, 
and that it can not close the break and protect the lives and property 
of the citizens. 

In accordance with these representations, the President instructed 
the Department of State to take the matter up with the ambassador 
at the City of Mexico. The latter stated in effect that the Mexican 
Government would give notice at once to the Mexican corporation of 
which you are president, calling upon that company to close the break 
in the river bank, stating that failure to do this will result in the 
annulment of the concession. 

On December 19 Mr. Harriman replied to the President’s telegram 
of December 15, advising him that the break dn the levees can be 
closed at a cost of from $300,000 to $350,000. He adds as follows: 

The Southern Pacific Company, having been at an expense of about $2,000,000 
already, it does not feel warranted in assuming this responsibility and the addi¬ 
tional expenditure which is likely to follow to make the work permanent 
besides the expenditure which this company is already undergoing to put its 
tracks above danger line. We are willing to cooperate with the Government, 
contributing train service, use of tracks and switches, use of rock quarries, train 
crews, etc., and the California Development Company will contribute its engi¬ 
neers and organization, the whole work to be done under the Reclamation Serv¬ 
ice. Can yOu bring this about? 


IMPERIAL VALLEY OR SALTON SINK REGION. 


13 


On December 20 the President replied to Mr. Harriman’s telegram 
as follows: 

Replying to yours of 19tli, Reclamation Service can not enter upon work with¬ 
out authority of Congress and suitable convention with Mexico. Congress 
adjourns to-day for holidays. Impossible to secure action at present. It is 
incumbent upon you to close break again. Question of future permanent main¬ 
tenance can then he taken up. That is all the aid that there is in the power of 
the Government to render, and it seems to me clear that it is the imperative duty 
of the California Development Company to close this break at once. Reclama¬ 
tion engineers available for consultation. 

The dangers ultimately due only to the action of that company in the past in 
making heading completed in October. 1904, in Mexican territory. The present 
crisis can at this moment only be met by the action of the company which is 
ultimately responsible for it, and that action should be taken without an hour’s 
delay. Through the Department of State 1 am endeavoring to secure such action 
by the Mexican Government as will enable Congress in its turn to act. But 
at present Congress can do nothing without such action by the Mexican 
Government. 

This is a matter of such vital importance that I wish to repeat that there is 
not the slightest excuse for the California Development Company waiting an 
hour for the action of the Government. It is its duty to meet the present danger 
immediately, and then this Government will take up with it, as it has already 
taken up with Mexico, the question of providing in permanent shape against the 
recurrence of the danger. 

Mr. Harriman replied to the above, under date of December 20, as 
follows: 

Replying to your telegram of this date, you seem to be under the impression 
that the California Development Company is a Southern Pacific enterprise. 
This is erroneous. It had nothing to do with its work or the opening of the 
canal. We are not interested in its stock, and in no way control it. We have 
loaned it some money to assist in dealing with the situation. What the Southern 
Pacific Company has done was for the protection of the settlers as well as of 
its tracks, hut we have determined to move the tracks onto high ground anyway. 
However, in view of your message I am giving authority to the Southern 
Pacific officers in the West to proceed at once with efforts to repair the break, 
trusting that the Government, as soon as you can procure the necessary Con¬ 
gressional action, will assist us with the burden. 

The following is the President’s reply, of same date: 

Am delighted to receive your message. Have at once directed the Reclamation 
Service to get into touch with you so that as soon as Congress reassembles I 
can recommend legislation which will provide against a repetition of the 
disaster and make provision for the equitable distribution of the burden. 

The situation, in brief, is this: We must have an official and con¬ 
clusive statement from some one who is authorized to speak for the 
California Development Company as to their plans and ability to 
carry out this work of building and maintaining permanent protec¬ 
tion for the Imperial Valley against overflow. The President has 
stated to me in his instructions of December 20 that the immediate 
work must be done by Mr. Harriman and his company. I have com¬ 
municated with Mr. Harriman. He has stated in his telegram to the 
President of December 20: 

You seem to be under the impression that the California Development Com¬ 
pany is a Southern Pacific enterprise. This is erroneous. It had nothing to do 
with its work or the opening of the canal. We are not interested in its stock 
and in no way control it. 

I have tried to ascertain from Mr. Harriman who are the; responsi¬ 
ble officers of the California Development Company. He has wired, 
on December 21, that he will find out the desired names and advise 


14 


IMPERIAL VALLEY OR SALTON SINK REGION. 


me. I now have the information that you are the president and 
responsible head of both the organizations, the California Develop¬ 
ment Company and the coordinate corporation in Mexico. 

We must have from you definite information, by wire if possible, 
as to whethter you have the means and intention of permanently 
closing the break in the west bank of Colorado River and the ability 
to maintain this in permanent form. You and the companies of 
which you are president control the situation. It is stated that these 
companies are bankrupt, but we have no evidence to this effect. It is 
obviously impossible for me to recommend to the President, or for the 
President to recommend to Congress, any action until the California 
Development Company takes some definite stand in this matter. 

Mr. Harriman disclaims all responsibility in the matter on behalf 
of himself and the Southern Pacific Company, and asserts that the 
only interest he has is that money has been loaned to the California 
Development Company to assist in dealing with the situation, and 
that what the Southern Pacific Company has done was for the pro¬ 
tection of the settlers, as well of its tracks, but that the company is 
determined to move its tracks onto high ground. 

The information which I desire from you by wire covers the fol¬ 
lowing points: 

First. Is the California Development Company able to build and 
maintain adequate works for delivering water to settlers in the 
Imperial Valley and of fulfilling its obligations as regards water 
rights ? 

Second. If the California Development Company and the Mexican 
corporation are not able to maintain and protect the levees along the 
west bank of Colorado River in a safe and permanent manner, will 
these corporations turn over to the United States the ownership and 
control of all of the works necessary for the protection of the val¬ 
ley, with some security or assurance that the Government may ulti¬ 
mately recover the money invested from the water users ? 

Very truly, yours, 


Chas. D. Walcott, Director . 


Col. Epes Randolph, 

President California Development Company , 

Tucson , Ariz. 


[Telegram.] 

Tucson, Ariz., January 4, 1907. 

Clias. D. Walcott, 

Director U. S. Geological Survey , Washington , D. C.: 

Re to your letter of December 28 I reply to question No. 1 as 
follows: The California Development Company has not the funds 
necessary to construct and maintain a levee system such as would be 
required to permanently control the Colorado River, but if the Cali¬ 
fornia Development Company could be relieved of the work of con¬ 
trolling the Colorado River it could supply the settlers of Imperial 
Valley with an abundance of water, and could in the end pay its 
own debts. Answering question No. 2, will say arrangements 
can be made whereby California Development Company and the 
Mexican corporation, which it controls, can be turned over to the 



IMPERIAL VALLEY OR SALTON SINK REGION. 


15 


Government with the Colorado River under permanent control. The 
California Development Company and its Mexican company would 
have assets largely in excess of their liabilities. 

Epes Randolph. 


[Telegram.] 


December 31, 1906. 

President California Development Company, 

Delta Building, Los Angeles, Gal.: 

Telegraphic requests have come from E. H. Harriman and people 
in southern California asking for aid in maintaining levees on Colo¬ 
rado River. No request from California Development Company 
nor indication that it is unable to control the situation permanently 
itself or whether it desires aid from the Government. Harriman 
disclaims responsibility for California Development Company. As¬ 
sertion has been made that company is bankrupt and can not handle 
situation. President Roosevelt desires me get in touch with the 
situation. Wire whether California DeA^elopment Company is able 
to build and maintain protection works and deliver water to settlers. 
If not able to do so, whether Government aid is desired and on what 
terms. Will control of protection works after completion and irri¬ 
gation system be turned over to Government ? 

Walcott, Director. 


[Telegram.] 


Tucson, Ariz., January 3,1907. 

Chas. D. W alcott, 

Director U. S. Geological Survey, Washington, D. 0.: 

Your message of December 31 received this morning. The Cali¬ 
fornia Development Company joins the people of southern Califor¬ 
nia in asking the Government to take over the work of permanently 
controlling the Colorado River, or that it appropriate money for the 
same. The California Development Company has outstanding 
liabilities to the extent of something over $2,000,000, and it has 
assets which will have a value largely in excess of its liabilities, 
provided the Colorado River is permanently controlled. California 
Development Company has no money with which to prosecute the 
work except such as Southern Pacific Company is lending it to meet 
its current pay rolls and other expenses connected with again closing 
the break in the river and patching the levees. If the Government 
will take over the work of controlling the river, California Develop¬ 
ment Company will be able to supply water to citizens of Imperial 
Valley and liquidate its indebtedness, or if it is the desire that the 
Government take over the entire project, assuming the liabilities, the 
matter could doubtless be accomplished in that way. 

Epes Randolph, 

. President California Development Company. 




16 


IMPERIAL VALLEY OR SALTON SINK REGION. 


The California Development Company, 

Los Angeles, Cal., December 26,1906. 

Dear Sir : As per your letter of even date, I beg to submit to you, 
as far as possible under existing conditions, a statement of the finan¬ 
cial affairs of the California Development Company. 

Owing to the emergency work during the months of September, 
October, and November, when it was necessary to get our material 
and supplies with the least possible delay, in order to accomplish the 
results, it scattered our bills payable so that it is impossible to give 
the exact amount of our indebtedness to the Southern Pacific Com¬ 
pany. To date the Southern Pacific Company has advanced 
$1,100,000 to me as treasurer of the California Development Com¬ 
pany. . . i 

Owing to the various arrangements enjoyed by the Southern Pa¬ 
cific Company, by reason of its volume of business, by allowing the 
Southern Pacific Company to make purchases for the California De¬ 
velopment Company we were enabled to obtain a price much lower 
than if we were to go into the open market; consequently there is 
between $500,000 and $000,000 of bills to date which have not been 
presented to us by the Southern Pacific Company, this representing 
work done during the construction of the dam and levee at the lower 
heading. In addition there is between $50,000 and $75,000 due the 
firm of Shattuck & Desmond for grading on the levee, and about 
$100,000 of current bills due in this city and San Francisco. 

The tangible assets of the California Development Company, as . 
shown on the books of the company, have considerable value, but 
when analyzed shrink to almost nothing; in fact, some of them, even 
if the water is stopped and the valley is put in prosperous condition, 
will never materialize, and others will have a greater value than is 
shown. For example, the Sociedad Company has a capital stock of 
$1,000,000, all of which is owned by the California Development 
Company, and has been carried on the books as par value. Its intrin¬ 
sic value can only be determined after the land (about 85,000 acres) 
and concessions from the Mexican Government are put on a substan¬ 
tial basis; therefore it has been reduced to the actual amount invested, 
$31,250. The California Development Compan}^ further owns 
$114,600 worth of No. 8 bonds. This company is insolvent and will 
be put through bankruptcy. 

In the settlement of a lawsuit C. R. Rockwood returned to the 
treasury of the California Development Company $27,100 par value 
of his holdings in the California Development Company; A. H. 
Heber, $101,900; W. T. Heff'erman, $42,300; H. W. Blaisdeli, $46,700; 
Mrs. K. D. Rockwood, $26,500; the Imperial Land Company, $25,606. 
As the California Development Company is hopelessly in debt, these 
assests at the present time are more of a liability, owing to the 
stockholders’ liability that necessarily follows it. 

The only real tangible assets owned by the California Development 
Company consist of $171,523.37 of collateral notes and mortgages 
(this as of June 30; it has been reduced since, owing to payments 
made). These collateral notes and mortgages were given to secure 
payments on said issue by the California Development Company of 
its proportion of the various mutual water companies. 

The books of the California Development Company, using as a 
basis the trial balance as of June 30, 1906, showed the Sociedad cur- 


IMPERIAL VALLEY OR SALTON SINK REGION. 


17 


rent account, which was for the cost of construction of canals in 
Mexico, of $336,481.86. It is estimated that these canals could now 
be constructed for considerably less than half of the amount so 
charged. 

In a like manner the California Development Company books show 
as an asset $260,817.79, cost of canals on the American side. 

The California Development Company is capitalized for $1,250,000, 
and has bonds outstanding of $477,920. 

The Southern Pacific Company, on June 20, 1905, loaned to the 
California Development Company the sum of $200,000, secured by 
51 per cent in the stock of the California Development Company, 
it being further agreed by the California Development Company that 
in consideration of the fact that the Southern Pacific Company fur¬ 
nished the monev thev could name the controlling board of directors 
and appoint the officers. Owing to the big inflation of the assets of 
the California Development Company and the lack of information 
in so far as pressing liabilities were concerned it was apparent on 
the face of representations made that the $200,000 would answer the 
purpose, but upon having advanced the money it was found that the 
amount so advanced was barely enough to keep the company out of 
the hands of a receiver. 

The failure of the Edinger dam in the Colorado River, occasioned 
by an unprecedented flood a year ago on Thanksgiving Day, repre¬ 
sented a loss of approximately $77,000. Owing to the lateness in the 
season it became apparent that it was impossible to build the dam until 
the following fall. From December, 1905, to the middle of November 
of this year the California Development Company constructed the re¬ 
enforced concrete head gate at Hamlins Heading, or more commonly 
known as the “American Intake; ” built the railroad from Hamlins 
Junction to Hamlins, and thence to the lower intake; constructed the 
Rockwood head gate; built Hinds dam, approximately 3,000 feet 
across, and constructed some 8 or 10 miles of the levee, besides keeping 
up the necessary repairs in the valley to prevent the Alamo waste gate 
and Sharps Ilea ding going out, owing to the increased pressure 
against them occasioned by the entire Colorado River flowing into 
the Salton Sink; built a levee around the town of Calexico, and in¬ 
numerable other emergencies that constantly arise. 

Yours, very truly, 

W. J. Doran, 1 "reasurer. 

Mr. A. E. Chandler. 


[Telegram.] 

January 2, 1907. 

E. H. Harriman, 

120 Broadway , New York City: 

In your telegram of December 20 you state that the Southern 
Pacific Company is in no way interested in the California Develop¬ 
ment Company and in no wa}^ controls it. I am informed that about 
one year ago you or your employees, acting for the Southern Pacific 
Company, obtained possession of a majority of the stock of the Cali¬ 
fornia Development Company, and that you or your employees 
elected the present officers and now direct the policy of the company. 


S. Doc. 212, 59-2-2 




18 


IMPERIAL VALLEY OR SALTON SINK REGION. 


Before I communicate with Congress it is essential that I have a 
direct statement as to your control of the California Development 
Company. Do you or your employees or men under your direction 
or control of the Southern Pacific Company hold or control the 
majority of stock in the California Development Company? Do you 
or your employees control its principal officers and its president or 
directorate and dictate its policy? If so, what is to be the attitude of 
the California Development Company toward Government aid in this 
matter ? 

Theodore Roosevelt. 


[Telegram.] 


New York, January 2. 1907. 

The President, The White IIo use: 

Your message this date just received. I have the whole matter up 
with our officers in the West, and will advise you particularly just as 
soon as possible. I am yet confined to bed, but hope to be around in 
two or three days. 

E. H. Harriman. 


[Telegram.] 


New York, January #, 1907. 

The President, Washington: 

Since my previous message of this date, I have learned that there 
is in the office here what purports to be copy of a contract explaining 
the relations between the Southern Pacific Company and the Cali¬ 
fornia Development Company, from which it appears that the 
Southern Pacific Company agreed, in June, 1905, to lend the Cali¬ 
fornia Development Company $200,000 to assist it in dealing with 
the situation, and to secure the loan stockholders of the California 
Development Company pledged 6,300 shares of its capital stock, and 
the agreement provides that until the loan is paid the Southern Pa¬ 
cific Company shall be allowed to select three members of the board 
of directors of the California Development Company, one of whom 
shall be elected president, provided such president shall be acceptable 
to at least two members of the board selected by the development com¬ 
pany, and it Avas under such agreement that Randolph Avas chosen 
president. I understand this provision for representation upon the 
board and the selection of the president Avas in order that we might 
supervise and keep check on the expenditure of the money lent by us. 

I will send you full details when I get them from the West. But 
1 say iioav that whatever may be the position of the Southern Pacific 
Company with California Development Company it is ready to 
transfer that position to the Government immediately under such 
conditions as you may deem fair, as Ave have never had any other 
purpose than the protection of the settlers, and I leave the matter 
entirely in your hands. MoreoA r er, we will cooperate with the Gov¬ 
ernment in giving the use of our plant and facilities in its efforts to 
stop the break. The Southern Pacific Company has no stock of the 




IMPERIAL VALLEY OR SALTON SINK REGION. 


19 


development company except the 6,300 shares held by it purely as 
collateral, as above stated. I have no stock of said company, nor 
have any officers or employees of the Southern Pacific Company 
stock in said California Development Company, so far as I know. 

I am informed that C. R. Rockwood, W. T. Hetferman, Mrs. 
Catherine Rockwood, H. W. Blaisdell, Beatty estate, estate of A. H. 
Heber, and J. N. Smith, none of whom are connected with the South¬ 
ern Pacific Company, are stockholders owning the control of the 
California Development Company. 

I am dictating this in bed, but hope to be out in two or three days. 

E. PI. Harriman. 


I. Telegram.] 


. January 3, 1907. 

E. H. Harriman, 

120 Broadway , New York: 

My information from West is to effect that Southern Pacific has 
claims against California Development Company aggregating 
$1,800,000. California Development Company has outstanding 
bonds of $478,000, and has sold water rights for almost 200,000 
acres, requiring expenditure of several million dollars to provide 
permanent supply of water for these rights; also has other debts and 
reported recent bond issues. Its assets are lands costing $31,000, 
canals worth quarter million, notes of settlers $170,000. Principal 
officers or stockholders now being sued for misappropriation of about 
million dollars of company funds which should have been used for 
protective works. Are these statements approximately correct? Of 
course it may be doubtful whether Government can accept your kind 
proposal to transfer to it what you term the position of the Southern 
Pacific Company with reference to the California Development 
Company if such transfer would as a chief effect mean the assump¬ 
tion by the Government of some millions of obligations. I there¬ 
fore earnestly desire to know the facts in detail, that I may fully 
report to Congress thereon. 

Theodore Roosevelt. 


[Telegram.] 

New York, January J, 1907. 

The President, 

The White House , Washington: 

Your message of this date is received. I have no knowledge of 
the assets or indebtedness mentioned in your message. I have al¬ 
ready telegraphed out West, where the books are kept, to ascertain 
whether the Southern Pacific Company has made any other advances 
beyond the amount provided for in the contract of June, 1905, re¬ 
ferred to in my message of yesterday. I am using every possible 
means to get exact information and shall give it to you as soon as 
received. Am absolutely certain, however, that the relation of the 
Southern Pacific Company to the California Development Company 
is only that of creditor. My telegram of yesterday was not intended 
to ask the Government to assume any obligation of the Southern 




20 IMPERIAL VALLEY OR SALTON SINK REGION. 

Pacific Company, except so far as you might deem it fair for the 
Government to assume advances made by the Southern Pacific Com¬ 
pany to assist the Development Company in efforts to prevent dam¬ 
age by the river. The Southern Pacific Company lias never assumed 
any obligation of the California Development Company. 

E. H. Harriman. 


This memorandum of agreement made and entered into this the 20th 
day of June, 1905, by and between the California Development 
Company (a corporation organized and existing under and by 
virtue of the laws of the State of New Jersey), party of the first 
part, and the Southern Pacific Company (a corporation organized 
and existing under and by virtue of the laws of the State of Ken¬ 
tucky), the party of the second part, witnesseth: 

That whereas party of the first part is desirous of borrowing from 
party of the second part, on the terms hereinafter set out, the sum of 
two hundred thousand ($200,000) dollars, to be used by it in paying 
off certain of its floating indebtedness and in completing and perfect¬ 
ing the canal system of first party, and of that certain corporation 
known as the Mexican Company; and 

Whereas on the terms and conditions hereinafter set out, party of 
the second part is willing to make such loan; 

Now, therefore, in consideration of the premises aforesaid and of 
the several mutual covenants and promises herein contained, the 
parties hereto do hereby covenant, promise, and agree as follows, 
to wit: 

1. Party of the second part is to loan and advance to party of the 
first part and at once pay into its treasury the sum of two hundred 
thousand ($200,000) dollars; which said loan is to be repaid by 
first party to second party on or before March 1, 1911, in install¬ 
ments as follows: Twenty thousand ($20,000) on or before March 
1, 1907; thirty thousand ($30,000) dollars on or before March 1, 
1908; forty thousand ($40,000) dollars on or before March 1, 1909; 
fifty thousand ($50,000) dollars on or before March 1, 1910, and 
sixty thousand ($60,000) dollars on or before March 1, 1911; all 
deferred payments to bear interest from date of advancement and 
payment of the money hereunder to first party until paid at the rate 
six (6) per cent per annum, pa}^able semiannually, and which said 
sum, with the interest thereon, first party agrees to pay to second 
party in installments as above fixed and set out. 

2. In order to secure said loan and the repayment of the same and 
to secure second party in making the same, it is agreed that during 

' the continuance of the whole or any part of said loan unpaid party 
of the second part is to have three members on first party’s board 
of directors, one of whom shall be during said time the duly 
elected president and general manager of first party and its busi¬ 
ness. To that end first party agrees to cause three members of its 
board of directors as now constituted to resign and in their places 
and steads to cause to be elected three parties to be selected for that 
purpose by second party; upon which being done first party is to 
cause the other members on said board then in California to vote for 
and elect one of the three directors so selected and named by second 



IMPERIAL VALLEY OR SALTON SINK REGION. 


21 


party to the office of president and general manager of first party 
and its business. And in the event of any vacancy occurring in the 
office of director held by either of said persons selected by party of 
the second part or in said office of president then party of first part 
shall cause such person to be elected to said office as part} 7 of second 
part shall designate. 

Provided , That such president shall be acceptable—that is, not ob¬ 
jectionable—to at least two members of the board other than those 
named by party of the second part. 

It is further agreed that, in addition to having the right of nom¬ 
inating three members of said board of directors, as herein provided 
for, all members of said board shall be acceptable—that is, not ob¬ 
jectionable—to second party. 

3. The said president and general manager so elected shall have 
the power to name first party’s secretary, treasurer, attorney, super¬ 
intendent, chief engineer, and consulting engineer, the parties so 
named, however, to be acceptable to at least two members of the 
board of directors of The California Development Company, other 
than those named by party of the second part as herein provided. 

4. To further secure said loan and the repayment thereof, with 
interest as aforesaid, party of the first part agrees to procure certain 
of its stockholders to pledge sixty-three hundred (6,300) shares of its 
capital stock; said stock to be deposited in pledge for such purpose 
with a trustee to be selected by party of the second part; said stock 
not to be transferred on the books of the corporation during the life 
of the pledge unforeclosed, but to remain in the names of the owners 
thereof who shall also have the right to sell and transfer their re¬ 
spective interests in the same, subject always to said pledge and the 
purposes thereof; at the time of so depositing said stock in pledge 
the respective owners thereof shall execute to the trustee or pledge 
so selected by the second party, irrevocable powers of attorney or 
proxies, giving to said trustee the right to vote said stock at all meet¬ 
ings of stockholders of first party held after ninety (90) days’ default 
in payment of any installment of said loan, or in performance of any 
other of first party’s agreements herein contained, and while such 
default continues. 

o. While any part of said loan remains unpaid no dividends 
are to be declared by party of the first part, first party specially agree¬ 
ing that during said time its entire receipts, particularly from water 
rentals, shall be applied to the perfecting of its canals and headings, 
and the canals and headings of said Mexican Company to the carry¬ 
ing on its regular business, and to the payments of its debts, includ¬ 
ing the said loan. 

6. All money advanced by first party to said Mexican Company, 
or spent on its canals and headings, is to be charged against said 
Mexican Company on first party’s books, to be paid back to first 
party out of the sales and rental of water and sales of land in Mexico 
by said Mexican Company, first party hereby covenanting and guar¬ 
anteeing that said Mexican Company will devote all such proceeds of 
sales and rentals of water and proceeds of sales of its lands to the re¬ 
payment to first party of all said money so advanced to or for it by 
first party. 

In order to further secure second party that the provisions of this 
paragraph will be carried into effect and execution, and the said loan 


22 


IMPERIAL VALLEY OR SALTON SINK REGION. 


will be repaid as hereinabove provided, the parties hereto and said 
Mexican Company at the same time of the execution hereof, and as 
part of the same transaction, have entered into and executed the an¬ 
nexed contract of even date herewith. 

7. It is further agreed that first party, being the owner of nearly 
all of the stock of said Mexican Company, will cause the board of di¬ 
rectors of said Mexican Company to be composed of men satisfactory 
to party of the second part. 

8. Failure at any time while any part of said loan remains unpaid 
to elect as members of first party’s said board of directors the three 
parties named therefor by second party, or failure to elect one of 
said parties as first party’s president and general manager, as here¬ 
inabove provided for, shall operate to cause and render all the bal¬ 
ance of said loan then unpaid to become immediately due and payable. 

9. Whenever said loan, principal and interest, has been repaid, 
according to the terms hereof, to party of the second part, then 
party of the second part agrees that the stock so deposited with the 
pledges or trustee above mentioned as security for the payment of said 
loan shall be returned by said pledges or trustee to party of the first 
part to be by it returned and delivered to the owners thereof and the 
parties entitled to the same; and party of the second part further 
agrees upon said loan being repaid according to the terms hereof, 
and not before, that it will cause the three directors of party of the 
first part, which it is to name as hereinabove provided, to resign as 
such directors in such manner that the directors may elect their suc¬ 
cessors, and upon the same being done party of the first part is to 
resume the full control and management of its affairs and its business. 

In witness whereof the said corporations parties hereto have here¬ 
unto caused their respective corporate names and seals to be hereunto 
affixed by their proper officers thereunto duly authorized. 

The California Development Company, 
Bv F. G. Rlaisdell, President. 

By W. T. Hefferman, Secretary. 

Southern Pacific Company, 

By E. E. Calvin, Vice-President. 

By C. B. Seger, Assistant Secretary. 


This memorandum of agreement made and entered into this 20th 
day of June, 1905, by and between The California Development 
Company, a corporation, party of the first part, La Sociedad de 
Yrrigacion y Terrenod de la Baja California (Sociedad Anonima), 
a corporation organized and existing under and by virtue of the 
laws of the Republic of Mexico (hereinafter and commonly called 
the Mexican Company), party of the second part, and the Southern 
Pacific Company, a corporation, party of the third part, witnesseth : 
That whereas parties of the first part and third parts at the time 
of the execution hereof as a part of this same transaction, have en¬ 
tered into and executed the foregoing and annexed contract or agree¬ 
ment in writing; and 

Whereas under said agreement party of the third part is to loan 
and advance the party of the first part the sum of two hundred 
thousand ($200,000) dollars therein mentioned under the terms and 



IMPERIAL VALLEY OR SALTON SINK REGION. 23 

conditions and for the purposes mentioned in said foregoing contract; 
and 

Whereas it is the understanding of all parties hereto that a large 
part of the money so loaned to party of the first part is for the real 
use and benefit of party of the second part in the work of repairing, 
constructing, and perfecting its canals and canal headings in the Re¬ 
public of Mexico, the said loan being entirely made to party of the 
first part, instead of partly to party of the first part and partly to 
party of the second part, for the reasons and because of the fact that 
the party of the second part is a foreign corporation having all of its 
properties in a foreign country, beyond the jurisdiction of the courts 
of the United States, and because of the further fact that the propor¬ 
tions of the said loan to be used by party of the first part and by 
party of the second part can not in advance be ascertained or deter¬ 
mined ; and, 

Whereas at the time of the agreeing to the making of said loan it 
was agreed by party of the second part that it should guarantee the 
said loan and the repayment thereof; 

Now, therefore, in consideration of the premises aforesaid, and in 
consideration of the entering into and execution of the foregoing 
contract hereto annexed, the said parties of the first and second part 
do hereby covenant, promise, and agree as follows, to wit: 

1. Party of the second part does hereby guarantee the repayment 
to party of the first of all of said loan, according to the terms, pro¬ 
visions, and conditions of the foregoing and annexed contract; to 
that end party of the second part agrees that all moneys received by 
it while said loan remains unpaid either from the sale of its land or 
water rights, or rights to use water, or from the rentals of water, 
shall be paid as received to party of the first part, to be by it used in 
the work of developing and perfecting and building the second 
party’s said canal and head gates, and in the payment of second 
party’s indebtedness, and in the repayment to party of the third part 
of said loan and the several installments thereof. 

Party of the second part also agrees that it will cause its board of 
directors to elect the president and general manager of party of the 
first part its general manager, and that it will give to said general 
manager power and authority to handle and dispose of its properties 
in the Republic of Mexico with power to contract and agree to furnish 
water for use on lands in Mexico at a rental of not less than fifty (50) 
cents gold per acre-foot of water delivered. 

2. As between parties of the first and second parts, there shall be 
kept regular books of account showing the amounts of money ad¬ 
vanced or paid out by party of the first part for party of the second 
part, and the amounts of money received by it belonging to or for 
party of the second part. Party of the third part, however, in no 
way to be concerned with the mutual accounts as between parties 
of the first and second part, that being a matter entirely between 
them and for their adjustment from time to time in the regular course 
of their mutual business and intercourse, party of the third part being 
concerned only that the receipts and returns from the sales and 
rentals of the property of party of the second part shall be set aside 
as hereinabove provided as security for the betterment and protection 
of its canals and canal system, the payment of its debts, and the pay¬ 
ments of the debt and loan to party of the third part. 


24 


IMPERIAL VALLEY OR SALTON SINK REGION. 


In witness whereof the several corporation parties hereto have 
hereunto caused their corporate names and seals to be hereunto affixed 
by their proper officers thereunto duly authorized. 

The California Development Company, 

By F. G. Blaisdell, President. 

By W. T. FIeffernan, Secretary. 

La Sociedad de Yrrigacion y Terrenos de la 

Baja California (Sociedad Anonima), 
By William T. Heffernan, President. 

By A. J. Flores, Secretary. 

Southern Pacific Company, 

ByE. E. Calvin, Vice-President. 

[seal.] By C. B. Seger, Assistant Secretary. 


Office of the Secretary of State, Development, Colonization, 

and Industry. 

section fifth. 

The President of the Republic has been pleased to address me the 
following decree: 

Porfirio Diaz, Constitutional President of the United States of Mexico, to its 
inhabitants, be it known: 

That the Congress of the Union lias seen fit to decree as follows: 

That Congress of the United States of Mexico decrees: 

Only article. Hereby is approved the contract that on the 17th of this 
month of May, 1904, was made between General Manuel Gonzales Cosio, sec¬ 
retary of state and of development, in representation of the Executive of the 
Union and Sr. Lie. Ignacio Sepveda, as representative of the Sociedad de 
Riego y Terrenos de la Baja California, S. A., to carry the waters of the Colo¬ 
rado River through Mexican territory and for the use of said waters. 

Luis Perez Verdia, President of the House of Deputies. T. Reyes Retana, 
President of the Senate. Carlos INI. Saavedra, Secretary of the House of Depu¬ 
ties. Carlos Flores, Secretary of the Senate. Signed. 

Therefore, I order it to he printed, published, circulated, and duly complied 
with. 

Given in the palace of the Executive Federal power on the 7th day of the 
month of June, 1904. Porfirio Diaz. 

To General Manuel Gonzalez Cosio, Secretary of State and of Development, 
Colonization, and Industry. Addressed. 

And I communicate it to you for its fulfilment and other purposes. 

Mexico, June 10, 1904. G. Cosio. To-. 

Revenue stamps for $25 duly cancelled. 


Contract entered into between the Citizen General D. Manuel Gon¬ 
zales Cosio , secretary of state and of development , in representa¬ 
tion of the Executive Government , and Lie. Ignacio Sepulved , as 
representative of the Sociedad de Riego y Terrenos de la Baja 
California , S. A r to carry the waters of the Colorado River 
through Mexican territory , and for the use of said waters. 

Article first. The Sociedad de Riego y Terrenos de la Baja 
California, S. A., is authorized to carry through the canal which it 
has built in Mexican territory and through other canals that it may 





IMPERIAL VALLEY OR SALTON SINK REGION. 


25 


build, if convenient, water to an amount of two hundred and eighty- 
four cubic meters per second from the waters taken from the Colorado 
River in territory of the United States by the California Develop¬ 
ment Company, and which waters this company has ceded to the 
Sociedad de Riego y Terrenos de la Baja California, S. A. It is also 
authorized to carry to the lands of the United States the water with 
the exception of that mentioned in the following article: 

Article second. From the water mentioned in the foregoing arti¬ 
cle, enough shall be used to irrigate the lands susceptible of irriga¬ 
tion in Lower California with the water carried through the canal or 
canals, without in any case the amount of water used exceeding one- 
half of the volume of water passing through said canals. 

Article third. Within the term of six months, counted from the 
publication of the present contract, the company shall deliver to the 
office of the secretary of development, in duplicate, properly ar¬ 
ranged in decimal, metrical scale, the maps and profiles of the canal 
already built and of the other hydraulic works connected therewith, 
with a descriptive report. 

Article fourth. The company is also authorized to connect, in 
Mexican territory, the aforesaid canal or canals with the Colorado 
River, so that it may be able, without injuring the rights of a third 
party nor the navigation as long as the river is destined for naviga¬ 
tion, to take from said river as much as two hundred and eighty- 
four cubic meters of water per second. Those waters shall be used 
in the irrigation of lands in Mexico and the United States in the 
proportion established in articles first and second. 

t Article fifth. The Executive Government may authorize the com¬ 
pany, while the needs of the country do not require the use of the 
total amount of the waters appropriated, to use them where it may 
find it convenient. 

Article sixth. The company, grantee, is under the obligation to 
deliver to the office of the secretary of development, within the term 
fixed in the following article, the design of the hydraulic works re¬ 
ferred to in article fourth, with a descriptive report, and the neces¬ 
sary maps on profiles for greater clearness of the details of the works. 

Article seventh. The surveys of the land to locate the hydraulic 
works shall be begun by the company, grantee, within the term of 
six months from the date of the promulgation of the present contract, 
and within the term of twelve months, counted from the same date, 
it will deliver to the secretary of development the respective maps of 
said works in duplicate, and properly arranged in a decimal, metrical 
scale, with the approval of the inspector to be appointed, and request¬ 
ing the approval of the secretary of development. 

The duplicate of the maps shall be returned to the company, 
grantee, with the annotation of having been approved or not, and 
the other copy shall remain in the archives of the office of the secre¬ 
tary. 

Article eighth. Within the term of twenty-four months, counted 
from the date of the promulgation of this contract, the company, 
grantee, shall begin the construction of the works, which shall be 
ended at the latest within seven years, counted from the same date. 

Article ninth. The company, grantee, may build over the canals 
it may construct the bridges it may think necessary for private traffic, 
presenting previously to the secretary of development for his ap- 


26 


IMPERIAL VALLEY OR SALTON SINK REGION. 


proval the maps, and the company shall be obliged also to build, at 
its own expense, the bridges which may be required for the local or 
general traffic whenever its canals shall traverse any road or high¬ 
way of public use, presenting the respective maps and requesting the 
previous approval of same, either from the secretary of interior 
and the government of the territory of Lower California or from the 
secretary of communications and public works, as the case may be. 

Article tenth. The company, grantee, is subject, in all that refers 
to the present contract, to the inspection of the engineer to be ap¬ 
pointed by the secretary of development, and obliged to contribute 
to the expenses of said inspection with the sum of three hundred dol¬ 
lars every month, which amount shall be delivered in advance to the 
general treasury of the federation from the date of the promulgation 
of the contract. 

In case that the company, grantee, should not fulfill the provisions 
of the present article it agrees with the right given the revenue col¬ 
lectors to seize and sell its property to pay the debts due to the 
treasury. 

c- 

Article eleventh. The company shall have the right of way of 
twentv meters in all the length of its canals on each side of said canals, 
besides the width of the said canals. 

Article twelfth. The lands belonging to the nation and which 
the company, grantee, may occupy in all the extension, as set forth 
in the foregoing article, and the lands which it may need for dams, 
reservoirs or basins, storehouses, depots, and other buildings shall 
be taken freely by the company in accordance with the provisions of 
Paragraph III, article 3, of the law of the 6th of June, 1894. , 

Article thirteenth. The company, grantee, may take, in accord¬ 
ance with the laws of condemnation bv reason of public utility, the 
private lands needed for the establishment of its aqueducts and their 
appurtenances, depots, stations, and other accessories in accordance 
with Fraction IV of article 3 of the law of June 6th, 1894, as per the 
following rules: 

1. If there should be no agreement between the company, grantee, 
and the owners of the land, there will be appointed an expert ap¬ 
praiser by each one of the parties, and both appraisers shall deliver 
to said parties their respective valuations within the term of eight 
days from the day of their appointment. If the valuations are not 
in accord, the case shall be submitted to the district judge of the ter¬ 
ritory of lower California, and he shall appoint a third expert, who 
shall render his decision within the peremptory term of eight days 
from the day of his appointment of the amount which in justice 
should be given to indemnify the owner of the lands to be occupied. 

The district judge, taking into consideration the opinion of the 
experts and the proofs presented by the parties, while the experts 
formulate their decision, shall fix the amount of indemnity within 
three days. The decree of the judge shall be final, unless it shall 
appear to be biased. 

2. If the owner of the land to be occupied for public use for the 
construction of the aqueducts, depots, appurtenances, and accessories 
should not appoint his expert appraiser within the term of eight days 
after so notified by the district judge, at the request of the company, 
grantee, said judge shall officially appoint an appraiser to represent 
the interests of the owner. 


IMPERIAL VALLEY OR SALTON SINK REGION. 


27 


. '-j* a jl cases in which it be necessary to apply to the district 
judge, said official, if the company, grantee, would ask it, or if it 
would he impossible for it to specify the amount of lands to be 
occupied, shall begin the case, and the judge, after having previously 
mul an audience with the Government engineer, or in the absence 
of this one, with the expert appointed by the same judge, shall name 
a sum to be deposited, while the case is tried, authorizing the com- 
P an y, grantee, meanwhile to occujiy the lands in question, with the 
understanding that if the final valuation of the experts should be 
more or less than the amount deposited by the company, grantee, the 
company to pay the balance or to receive the difference. 

4. If the owner of the lands in question should be unknown, or the 
ownership in dispute by reason of litigation or any other motive, 
the district judge shall fix, as the total of the indemnity, the amount 
rendered by the expert appointed by said judge in representation 
of the rightful owner of the land in question. The amount ulti¬ 
mately fixed shall be deposited in accordance with the legal pro¬ 
visions, to be delivered to whom it belongs. 

5. The experts, in making their valuations, must take into account 
the amount of taxes paid by the land to be condemned and damages 
and benefits to accrue by same to the owner. 

6. If, to carry out the surveys, it should be necessary to destroy or 
cut down, in all or in part, trees, cactus, or other obstacles, the com¬ 
pany, grantee, shall have the right to do it, being under the obliga¬ 
tions to pay an indemnity as soon as that be fixed. 

Article fourteenth. The company, grantee, is authorized to build 
the telegraph and telephone lines it may think necessary along its 
work, for the exclusive use of its enterprise, with the previous ap¬ 
proval of the secretary of communications and public works, and 
also to exploit those already built in the exclusive use of its works; 
the Government having the right to place freely and without any 
payment one or two telegraph wires on the posts of the line of the 
company, grantee, the company, being subject to the laws and rulings 
now in force, or that in the future may be enacted, for the construc¬ 
tion and exploitation of telegraph and telephone lines. 

Article fifteenth. The company, grantee, may import, free of 
custom-house duties for only once, all the engines, scientific instru¬ 
ments, and necessary apparatus for the outlines, construction, and 
exploitation of the works. 

The company, grantee, shall present to the secretary of develop¬ 
ment statements in detail of the articles which, in accordance with 
this concession, it shall have to import when needed, provided it be 
done within the stipulated terms in the present contract for the 
installation and construction, specifying in said statements the num¬ 
ber, quantity, and quality of the articles, observing for said importa¬ 
tion the rules enacted and which in the future be enacted by the 
treasury department, and also the limitations to be fixed by the sec¬ 
retary of development. 

Article sixteenth. The articles needed shall be imported by 
the company, grantee, for the exclusive use of its works and its 
exploitation, but if it should sell or apply to any other uses any or 
some articles, the secretary of the treasury shall exact the payment 
of the respective duties, besides the penalties fixed by law in cases 
of smuggling. 


28 


IMPERIAL VALLEY OR SALTON SINK REGION. 


Article seventeenth. During ten years from the promulgation of 
this contract, the capital invested by the company, grantee, in the 
survey, construction, and maintenance of the works referred to in this 
contract, shall be exempt from all Federal taxes, with the exception of 
those to be paid in stamps, which taxes shall be paid in accordance 
with the said law. 

Article eighteenth. The company, grantee, is at liberty to enter 
into contracts and agreements with individuals and private and pub¬ 
lic corporations for the use of the water granted to it, being subject 
in the prices to be charged to the tariff which, with due opportunity, 
shall be presented to the secretary of development for his examination 
and approval, the company, grantee, having the right, nevertheless, 
to use said waters in the irrigation of the lands belonging to it. 

Article nineteenth. The company, grantee, shall lose the right to 
use the water granted to it in this contract in article fourth in case it 
does not use it for a period of ten consecutive years, the Government 
being at liberty to grant it to any other persons, who, if they should 
accept the works made by the company, grantee, shall have to pay to 
this company the amounts fixed by the appraisers appointed by both 
parties. 

Article twentieth. The company, grantee, may transfer all or 
part of the concessions in the present contract with the previous per¬ 
mit of the secretary; also may mortgage it to individuals or private 
corporations; it being absolutely necessary in the first case that indi¬ 
viduals or associations accept, respectively, all and each one of the 
obligations imposed to the company, grantee, by the present contract. 

Article twenty-first. The company, grantee, shall have the right 
to issue common shares, preferred shares, bonds, and obligations and 
dispose of them. 

Article twenty-second. At no time nor by anv reason can the 
company, grantee, sell or mortgage the concessions made in the 
present contract to any Government or foreign State, nor admit it 
in partnership, it being null and of no value nor effect whatever, any 
stipulation made to that end. 

Article twenty-third. The company, grantee, shall have in this 
capital a representative fully authorized to treat with the Govern¬ 
ment in all that refers to the present contract. 

Article twenty-fourth. The company, grantee, shall guarantee 
the obligations contracted in this contract, making a deposit in the 
National Bank of Mexico of ten thousand dollars in bonds of the 
consolidated public debt within eight days from the promulgation of 
the contract, and said deposit shall be returned to it when the 
hydraulic works referred to in this contract be finished. 

Article twenty-fifth. This contract shall have no force if the 
deposit is not made within the term fixed in the foregoing article, 
and shall become extinct by the following reasons: 

1. For not beginning the works for the surveying and construction 
of the works and by not finishing the same in the term fixed in article 
seventh and eighth. 

2. For not making use of the waters in a term of ten consecutive 
years. 

3. By the transfer of this contract to an individual or corporation 
without the previous permit of the secretary of development. 


IMPERIAL VALLEY OR SALTON SINK REGION. 


29 


4. By the transfer or mortgage of this contract and the concessions 
herein contained to a Government or foreign State. 

Article twenty-sixth. If the cancellation of this contract shall 
take place by the reasons set forth in paragraphs 1 and 2 of the fore¬ 
going articles, the company, grantee, shall lose the deposit made and 
the concession and especial grants hereby made to it in this con¬ 
tract in article fourth and in those related to it, it being in force only 
in what refers to article first. 

In the case set forth in paragraph third the company, grantee, shall 
lose the deposit and the concessions and especial grants made to it in 
this contract. 

If the cancellation should take place by the reasons expressed in 
Paragraph IY, the company shall incur the loss of all its rights, 
estates, and properties of any kind related with this contract. 

In all cases and before the declaration of cancellation is made the 
secretary of development will grant to the company, grantee, a 
reasonable term to make its defense. 

Article twenty-seventh. The obligations agreed to by the com¬ 
pany, grantee, in regard to the terms fixed in this contract shall be 
suspended in all cases of unexpected accident or by force of the 
elements duly justified and which may stop directly and absolutely 
the fulfillment of such obligations. The suspension shall last only 
for the term that the causes exist, the company, grantee, being 
under the duty to give to the General Government the state¬ 
ments and proofs of the unexpected accident within the term of 
three months from the time it took place, and by the sole reason of 
not presenting the proofs within the said term it will be impossible 
for the company, grantee, to allege at any time the circumstances of 
unexjiected accident or the force of the elements. 

The company, grantee, shall also present to the Federal Govern¬ 
ment the statements and proofs that the works have been continued 
as soon as the cause has ceased to exist, the presentation of said state¬ 
ments to be made within two months following the other three above 
mentioned. The company, grantee, shall only be excused for the 
term during which the impediment existed or, at most, two months 
more. 

Article twenty-eighth. The Government shall give to the com¬ 
pany, grantee, the material and moral help within its possibilities, 
when the company so request it, to overcome the difficulties that may 
arise in carrying out the present contract. 

Article twenty-ninth. The company, grantee, shall be subject to 
the laws and rulings now in force and which in the future may be en¬ 
acted for the supervision, use, and benefit of the waters. 

Article thirtieth. The company, grantee, and its company as¬ 
signs, shall always be considered as Mexican corporations, though 
all or any of its stockholders could be foreigners, and the corporation 
shall be subject to the jurisdiction of the courts of the Republic in 
all the affairs emanating and to be decided within the territory of 
the Republic. 

They would never be able to allege in all the affairs in relation to 
the present contract the rights of foreigners under any circum¬ 
stances, and they shall only have the rights and the way to establish 
the same as the laws of the Republic grant them to the Mexicans, and 


30 


IMPERIAL VALLEY OR SALTON SINK REGION. 


consequently in any of said affairs the diplomatic foreign agents shall 
not have any interference. 

Article thirty-first. This contract shall be subject to the ap¬ 
proval of both houses. 

Article thirty-second. The stamps on this contract shall be paid 
by the company, grantee. 

Made in duplicate, in the City of Mexico, on the 17th day of the 
month of May, 1904. 

Manuel G. Cosio. 

Y. Sepulveda. 

CERTIFICATE OF CERTIFICATION. 

I, William T. Heffernan, the duly elected secretary of the Sociedad 
de Yrrigacion y Terrenos de la Baja, California, Sociedad Anonima, 
do hereby certify that the foregoing is a true and correct copy of 
contract between the Mexico Republic, approved by its Congress, 
and the Sociedad de Yrrigacion y Terrenos de la Baja California, 
Sociedad Anonima, for the diversion, conduction, use, and sale of 
water from the Colorado River. 

And I do further certify that the same is recorded in the minute 
book of the company and the original instrument on file in the office 
of the company in the city of Los Angeles, State of California. 

In witness whereof I have hereunto signed my name as secretary 
of the company, duly authorized, and affixed the seal of the corpora¬ 
tion, the 27th day of August, 1904. 

(Signed) William T. Heffernan, 

Secretary. 

CERTIFICATE of translation. 

I, A. J. Flores, do hereby certify that the foregoing is a true and 
correct translation of that certain instrument drawn, executed, and 
approved in the Spanish language, being a contract between the 
Republic of Mexico and the Sociedad de Yrrigacion y Terrenos de la 
Baja California, Sociedad Anonima, to divert, conduct, use, and sell 
water from the Colorado River. 

In witness whereof I have hereunto set my hand and seal, at 
Los Angeles, Cal., the 27th day of August, 1904. 

[seal.] (Signed) A. J. Flores, Translator. 


Synopsis Statement of the FIistory of the California Develop¬ 
ment Company and of the Diversion of the Colorado River into 

WHAT IS NOW KNOWN AS THE IMPERIAL VALLEY. 

By Edwin A. Meserve, Attorney for the California Development Company. 

This statement being made largely from memory, is not intended 
to be accurate as to dates nor as to measurements, but is accurate as a 
matter of general history. 

Prior to 1893 a man by the name of W. H. Beatty, of Denver, Colo., 
through some source of information unknown to me, had conceived 



IMPERIAL VALLEY OR SALTON SINK REGION. 


31 


the idea that the waters of the Colorado River could be diverted and 
carried through the southwestern portion of the State of California 
to what was then known as the Colorado Desert and now known as 
the Imperial Valley. 

He caused to be organized what was known as the Colorado River 
Irrigation Company, which he attempted to promote. The work of 
this company proved a failure. Toward the latter end of its exist¬ 
ence a Mr. C. R. Rockwood was employed as its engineer. In running 
the lines for this company Mr. Rockwood ascertained that the waters 
of the Colorado River could be diverted in California at a place 
known as Hanlons, just immediately north of the boundary line be¬ 
tween California and Lower California, and then carried in the form 
of a crescent around the sand hills, some 40 or 45 miles, back into 
California and into the Colorado Desert, or Imperial Valley. He, 
with the assistance of some friends, purchased the surveys and other 
property belonging to the Colorado Irrigation Company and at once 
started out on the work of trying to enlist capital in the enterprise of 
bringing the waters of the Colorado River around through Mexico 
and into California for the reclamation of this great body of valuable 
land. 

In 1893 he and his associates caused to be incorporated, under the 
laws of the State of New Jersey, the California Development Com¬ 
pany, and in the year 1894 secured an option from Guillermo 
Andrade, the owner, on 100,000 acres of land lying immediately 
south of the boundary line, which lands were not to include any of 
the sand hills, the south boundary line of the lands covered by the 
option to extend sufficiently south to include 100,000 acres, taking in 
what is now known as the Alamo River channel, then called the 
Salton or Carter River. 

Andrade owned at that time approximately 400,000 acres of land, 
extending from the Colorado River on the east nearly to the 
Cocopah Mountains on the west. This contract with Andrade was 
allowed to expire because of the inability of Mr. Rockwood and his 
associates to take it up. But in June, 1898, a contract of purchase 
was entered into between the California Development Company and 
Andrade for the purchase and sale of this 100,000 acres of land, to¬ 
gether with all rights in the Salton or Carter River, as it was called, 
where the same made a bend south of and outside of the 100,000- 
acre tract. 

It was the purpose of the California Development Company to pur¬ 
chase these lands direct, but it was found that, under the laws of the 
Republic of Mexico, American citizens could not buy land within a 
certain prohibited zone, except by special permission of the President 
of the Republic of Mexico. Accordingly there was organized a Mex¬ 
ican company, having a small capital stock, the same being known 
as La Sociedad de Irrigaccion y Terrenos de Baja California (Soci- 
edad Anonima), always referred to as “ the Mexican company.” 
The title to the 100,000-acre strip and to the rights to the channel of 
the Salton or Carter River (properly the Alamo River), was vested 
in this Mexican company, all of the stock, with the knowledge of the 
authorities of Mexico, being owned by the California Development 
Company, the directors of the Mexican company being all American 
citizens, there being, however, a Mexican citizen, resident of Los 


32 


IMPERIAL VALLEY OR SALTON SINK REGION. 


Angeles, retained by requirement as secretary, and on whom all 
papers are served by the Mexican Government. 

The charter of the Mexican company provides that the principal 
place of business shall be in Mexico, but that the company may have 
an office and principal place of business and place for the meeting 
of its directors in Los Angeles, Cal. Accordingly the principal place 
of business and the place where the annual election is held is Mexi- 
cala, just across the boundary line from Calexico, but the principal 
office of the corporation has always been in Los Angeles. 

The California Development Company, prior to 1900, entered into a 
contract with George Chaffee, which called for the financing of the 
California Development Company by Chaffee, he being put in con¬ 
trol of the corporation and given proxies by the stockholders owning 
more than a majority of the stock. Chaffee was to furnish the money 
necessary to buy the lands at Hanlons and build the canals through 
Mexico to California and the distributing systems in California. 
Instead of doing this he built what might be called only a temporary 
canal, and with a heading which never was of any service, and so 
handled the securities which the company acquired from the parties 
to whom it sold water rights, and the moneys received, that in Decem¬ 
ber, 1901, the stockholders of the company found that he and his 
associates were taking from the company everything that it was tak¬ 
ing in, and that they were not expending one dollar of their own 
money in developing the company’s property. 

Negotiations ensued, with the result that in February, 1902, the 
stockholders of the company again took over its affairs, electing Mr. 
A. H. Heber president and again putting Mr. C. R. Rockwood in 
charge of the engineering affairs of the company. The company had 
no money and but very few of the securities. It now has an action 
pending against Chaffee and his associates to recover something over 
$900,000 of money, mortgages, notes, and bonds. 

The Imperial Valley had settled very rapidly and the demand for 
water was increasing faster than the means of the company could 
supply it. The result of necessity was that the system constructed 
was not what it ought to have been or what it would have been if the 
funds and property of the company had been properly used instead of 
being diverted into the private hands of the former management. 

The large percentage of silt in the Colorado River soon demon¬ 
strated that the canal system, as planned by Mr. Chaffee, would be a 
failure. In fact, the canals silted faster than the machinery at the 
command of the company could clean them out. 

In the fall of 1903, a shortage of water ensued and the company 
found itself obligated to furnish to the settlers of that valley, which 
lies entirely below sea level, more water than the canal heading would 
take in, and consequently a second intake from the river to the canal 
was cut in the spring of 1904, just below the boundary line. About 
this time, the California Development Company, in the name of the 
Mexican company, was granted by the Republic of Mexico a con¬ 
cession by which it was permitted to take 10,000 second-feet of water 
from the Colorado River, in Mexico, with the right to carry one- 
half of that water and such water as was delivered to it at the 
boundary line by the California Development Company, back into 
the United States; the other one-half of all such waters to be 


IMPERIAL VALLEY OR SALTON SINK REGION. 


33 


devoted primarily to the irrigation of lands in Lower California, 
with permission, however, to carry into California all of that one- 
half of the water which was not needed for use in Mexico. The 
California Development Company, by acquiring the title to the lands 
at Hanlons, had acquired the only site for controlling head gates 
on the river below what is now known as the Laguna dam. The 
site also controls what might be called or termed the gateway for the 
carrying of waters into Mexico and through Mexico again into 
the United States. By the terms of the concession from the Mexican 
Government to the Mexico company it was provided that no intake 
connecting with the Colorado River should be constructed in Mexico 
until the plans for all proposed structures were first approved by 
the proper engineering authorities of Mexico. 

In the spring of 1904, what was known as intake No. 2, namely— 
the one just below the boundary line, silted up, as did the main 
intake in California, which necessarily resulted in a shortage of water 
in the Imperial Valley at the beginning of its hot season. This con¬ 
dition continued until matters became so serious, in June, 1904, that 
Mr. Rockwood stated to Mr. Heber that he believed they would have 
to take the chance and cut a third intake from the river to the canal, 
about four miles below the boundary line, stating that as the fall of 
the canal was so much more rapid than the fall of the river, he 
believed there would be no trouble in keeping the intake open. The 
company had no money with which to build structures, and even if 
it had, there would not have been time either for the building of 
structures or the submitting of plans for approval to the City of 


Mexico. 

After consultation with Mr. Heber, Mr. Rockwood, by direction of 

/ / * 

the company and in order to save the stock and such of the crops as 
were not already dead in the Imperial Valley, made the opening at 
what has since been known as “ Intake No. 3.” 

In the latter part of June or the early part of July, 1904, before 
making this connection, Mr. Rockwood stated to Mr. Heber, the 
president of the company, that if he was furnished with lumber v T itb 
which to build a controlling gate one month before the time when 
floods were to be expected he would not have to close the intake even 
in the winter season. This Mr. Heber promised he would furnish, 
expecting to be able to do so, but the financial condition of the com¬ 
pany continued to be such that he was never able to furnish the ma¬ 
terial for this temporary structure. This lower intake silted up once 
and had to be dredged in order to keep the water flowing there¬ 
through. The floods in the fall of 1904 came earlier than usual, with 
the result that the opening at this third intake began to wash and the 
inflow to increase, and from that day until the close of 1906 the con¬ 
dition continued to grow worse. By the middle of December, 1904, 
sufficient water was going into the canal through this lower intake 
to pass into the New River and on through the New River into the 
Salton Sink, starting what has since been known as the Salton Sea. 

Mr. Rockwood and Mr. Heber made every effort possible to get 

money sufficient to build the structures necessary to regulate this flow. 

but before monev could be furnished the intake would be widened 

• » 

and the expense increased. Numerous efforts, however, were made 
with the means at hand, all proving failures. 


S. Doc. 212, 59-2-3 



34 


IMPERIAL VALLEY OR SALTON SINK REGION. 


By the last of March, 1905, differences had arisen between Mr. 
Heber on the one side and a majority of the stockholders of the Cali¬ 
fornia Development Company on the other. These gentlemen, headed 
by Mr. Rockwood, had come to the conclusion that Mr. Heber could 
not finance the company and that other arrangements would have to 
be made, and in April, 1905, Mr. Rockwood entered into negotiations 
with the representatives of the Southern Pacific Company, which re¬ 
sulted in a tentative agreement to the effect that if Mr. Rockwood 
could control the election of the directors at the annual meeting in 
Jersey Citv on the succeeding 6th dav of June, that the Southern 
Pacific would advance $200,000 to the company as a loan on the terms 
agreed upon. 

At the annual meeting on the 6th of June, 1905, a struggle ensued 
between Mr. Heber and the stockholders working with him and Mr. 
Rockwood and the stockholders working with him. It soon became 
manifest, however, that Mr. Rockwood and his associates were in 
the majority and a conference was then had, which resulted in an 
agreement that all of the stock of the company should be voted for a 
board of directors agreed upon and in favor of entering into the 
proposed contract with the Southern Pacific Company. 

This arrangement provided that the Southern Pacific Company 
should name three directors, the stockholders three directors, and a 
seventh should be selected satisfactory to all parties. A dummy 
board was selected, which met in Los Angeles, and on or about the 
20th day of June the permanent contract with the Southern Pacific 
Company was authorized, a cop}" of which I will append hereto as an 
exhibit. 

The Southern Pacific named three directors, the stockholders of 
the California Development Company three, and all parties agreed 
on myself as the seventh director, I having been the attorney of the 
company since February, 1902, and not being interested except as 
the attorney in any of its affairs. By the terms of the contract it 
was provided that the president and general manager of the com¬ 
pany should be one of the three directors chosen by the Southern 
Pacific Company, but that he should be approved by two of the di¬ 
rectors selected by the stockholders of the California Development 
Company. Mr. Epes Randolph was chosen for this position and has 
since been the head of the company. In addition to having three 
out of the seven directors, the Southern Pacific was given by the 
terms of the contract security for its loan in the way of a pledge by 
the stockholders of the California Development Company of a ma¬ 
jority of the stock, also a pledge of certain securities owned by the 
company. 

The $200,000 loaned by the Southern Pacific Company under this 
contract was at once put into the treasury of the California Develop¬ 
ment Company and the work resumed of shutting out the water of 
the Colorado River, all of which was then practically flowing 
through the canals of the company into the Imperial Valley and the 
Salton Sink. The floods of the Colorado River came on in succes¬ 
sion unexpectedly and each time washed out the work then in prog¬ 
ress of shutting out the water. The $200,000 was soon used up; 
the Southern Pacific then advanced more money and again more 
money, all for the purpose of shutting out this water, until in the 


IMPERIAL VALLEY OR SALTON SINK REGION. 


35 


fall of 1906, it had loaned to the California Development Company, 
under the arrangement above set forth, something over $600,000. 

Then came the disastrous flood in August or September, 1906, 
which washed out what was known as the Ilockwood gate, a struc¬ 
ture which had cost something* like $150,000 to build. There was 
nothing then to do but to undertake to build a rock dam across the 
rapidly widening channel which had been washed by the Colorado 
River at the point known as “ intake No. 3.” By the time the work 
was done this channel was something like 1,800 feet wide. The 
Southern Pacific put every resource at its command at the disposal 
of Mr. Randolph, with the result that a rock and gravel dam was 
constructed across this channel and the water shut out in the month 
of October or November, 1906. 

Then came the floods of the latter part of November and early 
December, 1906, washing out a levee just below this dam, resulting 
in a cutting back and a cutting out of the end of the dam. This 
breach in the dam is now widened to about 1,000 feet. Again the 
Southern Pacific Company is furnishing the means to close this 
break. The amount of indebtedness of the California Development 
Company to the Southern Pacific has not been adjusted, but will 
approximate $1,800,000. The continued and unprecedented floods 
of 1905-6 have shown the necessity of building an expensive levee 
along the western bank of the Colorado River for a number of 
miles below this intake No. 3, in order to protect the properties of 
the settlers in the Imperial Valley. 

At the beginning of the enterprise and of the settlement of the 
Tmeprial Valley certain people, desiring to get something for nothing, 
conceived the idea that they could locate Government lands along 
the line of the New River and get water therefor, without buying the 
same, from the Avast waters Avhich were bound to go doAvn the New 
River. But very feAv people Avho located lands in what is noAv the 
bed of the NeAv River channel bought or paid for any water rights. 

The flood waters from the Colorado River from all directions 
found their way into the channels of the Alamo and Ncav rivers, and 
Avere led therethrough into the Salton Sink, forming Avhat is now 
knoAvn as the Salton Sea. The tremendous body of Avater passing 
down the channel of the NeAv River has resulted in the formation of a 
very deep and Avide channel the Avhole length of the Imperial Valley, 
Avashing out many of these ranches and doing a great deal of damage, 
the waters in the Salton Sink destroying the works of the New Liver- 
pool Salt Company. 

About the 21st of December, 1906, the Mexican Government tele¬ 
graphed to its consulate at Los Angeles a preliminary informal notice 
to be served on the Mexican company, notifying it that the Mexican 
boundary line commissioner would soon call upon the Mexican com- 
pany and would serve a notice demanding that he be furnished 
Avithin ten days thereafter proof satisfactory that the Mexican com¬ 
pany had the means, within thirty days thereafter, to shut out and 
control the waters of the Colorado River, or else the concession to the 
Mexican company would be canceled and the Avater shut out of 
Mexico. 

The boundary commissioner of Mexico is thoroughly familiar with 
the conditions, is a competent engineer, and has already expressed his 


36 


IMPERIAL VALLEY OR SALTON SINK REGION. 


opinion as to what is necessary in order to “ control ” the waters of the 
river. This, in his opinion, includes the building of the levees above 
mentioned This, of course, could not be done within thirty days in 
any event, and the company, it goes without saying, has not the 
money to do it. 

I am advised by wire to-day that the boundary commissioner has 
not yet served this notice, though he is on the ground. If the Govern¬ 
ment of Mexico should cancel the concession and shut the water out 
of Mexico, a few days without water in that climate would settle all 
questions. 

The California Development Company, wondering why Mexico 
should cause this notice to be served, made inquiries at the city of 
Mexico, such as it could make, and was advised informally that the 
reason was that claims were being made for damages by settlers 
along the New River and by the New Liverpool Salt Company against 
the Government of Mexico, through the Government of the United 
States, for damages caused by reason of the Mexican Government 
having permitted a Mexican corporation to negligently divert the 
waters of the Colorado River from their natural channel in Mexico 
into the channel of the New River, resulting in the washing out of 
these ranches and of the flooding of the properties of the salt com¬ 
pany. 

The Mexican Government very properly takes the position that if 
damages to American citizens, occasioned by a Mexican corporation 
owned by American citizens, and which corporation by permission 
in a way was but an auxiliary to an American corporation, then the 
quicker it shut out all of the water from Mexico the better. How 
the Government of Mexico has become informed of these claims for 
damages we do not know, nor are we aware that they have been 
formally or at all presented by the Government of the United States 
to the Government of Mexico. We only know that the claims were 
prepared and that our attorney in Mexico has been given to under¬ 
stand that the occasion for the threatened cancellation of the con¬ 
cession and the shutting out of the waters is the existence of the 
claims. 

If the break be repaired, Mexico can shut the water out of the canal 
in a very short time with the machinery which the company now has 
in the canal in Mexico and which is registered as Mexican machinery. 
There is no obligation on the part of Mexico to the citizens of the 
United States to keep the canal open or to permit it to remain open. 

What the California Development Company desires is that the Gov¬ 
ernment at Washington assist it in having Mexico withdraw its no¬ 
tice of cancellation of this concession and to permit the closing of the 
break and the building of the protecting works and that the Govern¬ 
ment of the United States should assist in some manner in the build¬ 
ing of these levees and in shutting out the water. 

The company has assets amply sufficient to meet and pay all debts 
for any of these purposes which legitimately should be charged 
against it, but these assets are in such shape that it would take tune 
to convert them into cash—perhaps years. 

The Southern Pacific Company does not own one share of stock in 
the California Development Company, and l do not believe that any 


IMPERIAL VALLEY OR SALTON SINK REGION. 


37 


man connected with the Southern Pacific Company has any desire 
that the Southern Pacific Company should in any way take over the 
California Development Company. It has been forced to loan and 
advance a large sum of money, and this presumably it will want paid 
back. 

e would ask immediate action by this Government. We believe 
that the Government should build the levees, because they form no 
part of the system for the delivering of water to the settlers in the 
valley, and we believe that through the medium of the Mexican com- 
pany this can be done by the officers of the Reclamation Service, or 
such other service of the Government to which the work may be 
assigned. 

Respectfully submitted. 

Edwin A. Mesene. 


This memorandum of agreement made and entered into this the 20tli day of 
June. 1905, hy and between the California Development Company (a corporation 
organized and existing under and hy virtue of the laws of the State of New 
Jersey), party of the first part, and the Southern Pacific Company (a corpora¬ 
tion organized and existing under and hy virtue of the laws of the State of 
Kentucky), the party of the second part, witnesseth: 

That whereas party of the first part is desirous of borrowing from party of 
the second part, on the terms hereinafter set out. the sum of two hundred thou¬ 
sand ($200,000) dollars, to he used by it in paying off certain of its floating 
indebtedness and in completing and perfecting the canal system of first party 
and of that certain corporation known as the Mexican company; and 

Whereas, on the terms and conditions hereinafter set out, party of the second 
part is willing to make such loan : 

Now, therefore, in consideration of the premises aforesaid and of the several 
mutual covenants and promises herein contained, the parties hereto do hereby 
covenant, promise, and agree as follows, to wit: 

1. Party of the second part is to loan and advance to party of the first part 
and at once pay into its treasury the sum of two hundred thousand ($200,000) 
dollars, which said loan is to he repaid hy first party to second party on or 
before March 1, 1911, in installments as follows: Twenty thousand ($20,000) 
on or before March 1, 1907; thirty thousand ($30,000) dollars on or before 
March 1. 1908; forty thousand ($40,000) on or before March 1. 1909; fifty thou¬ 
sand ($50,000) dollars on or before March 1, 1910, and sixty thousand ($60,000) 
dollars on or before March 1. 1911. all deferred payments to bear interest from 
date of advancement and payment of the money hereunder to first party until 
paid at the rate of six (6) per cent per annum, payable semiannually, and which 
said sum, with the interest thereon, first party agrees to pay to second party 
in installments as above fixed and set out. 

2. In order to secure said loan and the repayment of the same, and to secure 
second party in making the same, it is agreed that during the continuance of 
the whole or any part of said loan unpaid party of the second part is to have 
three members on first party’s board of directors, one of whom shall he during 
said time the duly elected president and general manager of first party and its 
business; to that end, first party agrees to cause three members of its board 
of directors as now constituted to resign and in their places and steads to cause 
to he elected three parties to be selected for that purpose by second party; upon 
which being done, first party is to cause the other members on said board then 
in California to vote for and elect one of the three directors so selected and named 
by second party to the office of president and general manager of first party 
and its business. And in the event of any vacancy occurring in the office of 
director held by either of said persons selected by party of the second part, or in 
said office of president, then party of first part shall cause such person to be 
elected to said office as party of second part shall designate. 



38 


IMPERIAL VALLEY OR SALTON SINK REGION. 


Provided , That such president shall he acceptable—that is, not objection¬ 
able—to at least two members of the board other than those named by party of 
the second part. 

It is further agreed that, in addition to having the right of nominating three 
members of said board of directors, as herein provided for, all members of 
said board shall be acceptable—that is, not objectionable—to second party. 

3. The said president and general manager so elected shall have the power 
to name first party’s secretary, treasurer, attorney, superintendent, chief engi¬ 
neer, and consulting engineer, the parties so named, however, to be acceptable 
to at least two members of the board of directors of the California Develop¬ 
ment Company other than those named by the party of the second part as 
herein provided. 

4. To further secure said loan and the repayment thereof, with interest as 
aforesaid, party of the first part agrees to procure certain of its stockholders 
to pledge sixty-three hundred (6,300) shares of its capital stock; said stock to 
be deposited in pledge for such purpose with a trustee, to be selected by party 
of the second part; said stock not to be transferred on the books of the cor¬ 
poration during the life of the pledge unforeclosed, but to remain in the names 
of the owners thereof, who shall also have the right to sell and transfer their 
respective interests in the same, subject always to said pledge and the purposes 
thereof; at the time of so depositing said stock in pledge, the respective owners 
thereof shall execute to the trustee or pledgee so selected by second party 
irrevocable powers of attorney or proxies, giving to said trustee the right to 
vote said stock at all meetings of stockholders of first party held after ninety 
(90) days’ default in payment of any installment of said loan, or in perform¬ 
ance of any other of first party’s agreements herein contained, and while such 
default continues. 

5. While any part of said loan remains unpaid no dividends are to be 
declared by party of the first part, first party specially agreeing that during 
said time its entire receipts, particularly from water rentals, shall be applied 
to the perfecting of its canals and headings and the canals and headings of 
said Mexican company to the carrying on of its regular business and to the 
payments of its debts, including the said loan. 

6. All money advanced by first party to said Mexican company, or spent 
on its canals and headings is to be charged against said Mexican company on 
first party’s books, to be paid back to first party out of the sales and rental of 
water and sales of land in Mexico by said Mexican company, first party hereby 
covenanting and guaranteeing that said Mexican company will devote all such 
proceeds of sales and rentals of water and proceeds of sales of its lands to the 
repayment to first party of all said money so advanced to or for it by first 
party. 

In order to further secure second party that the provisions of this paragraph 
will be carried into effect and execution, and the said loan will be repaid as 
hereinabove provided, the parties hereto and said Mexican company at the 
same time of the execution hereof, and as part of the same transaction, have 
entered into and executed the annexed contract of even date herewith. 

7. It is further agreed that first party, being the owner of nearly all of the 
stock of said Mexican company, will cause the board of directors of said Mex¬ 
ican company to be composed of men satisfactory to party of the second part. 

8. Failure at any time while any part of said loan remains unpaid to elect 
as members of first party’s said board of directors the three parties named 
therefor by second party, or failure to elect one of said parties as first party’s 
president and general manager, as hereinabove provided for, shall operate to 
cause and render all the balance of said loan then unpaid to become immediately 
due and payable. 

9. Whenever said loan, principal and interest, has been repaid, according to 
the terms hereof, to party of the second part, then party of the second part 
agrees that the stock so deposited with the pledges or trustee above mentioned 
as security for the payment of said loan shall be returned by said pledgee or 
trustee to party of the first part, to be by it returned and delivered to the 
owners thereof and the parties entitled to the same; and party of the second 
part further agrees upon said loan being repaid according to the terms hereof, 
and not before; that it will cause the three.directors of party of the first part 
which it is to name as hereinabove provided to resign as such directors in such 
manner that the directors may elect their successors, and upon the same being 
done, party of the first part is to resume the full control and management of 
its affairs and its business. 


IMPERIAL VALLEY OR SALTON SINK REGION. 


39 


In witness whereof the said corporations parties hereto have hereunto caused 
their respective corporate names and seals to be hereunto affixed by their proper 
officers thereunto duly authorized. 

[seal.] The California Development Company, 

By F. G. Blais dell, President. 

By W. T. Heffernan, Secretary. 

Southern Pacific Company, 

By E. E. Calvin, Vice-President. 

By C. B. Seger, Assistant Secretary. 


This memorandum of agreement, made and entered into this 20tli day of June, 
1905, by and between The California Development Company, a corporation, 
party of the first part. La Soeiedad de Yrrigacion y Terrenod de la Baja Cali¬ 
fornia (Sociedad Anonima), a corporation organized and existing under and by 
virtue of the laws of the Republic of Mexico (hereinafter and commonly called 
the Mexican company), party of the second part, and the Southern Pacific Com¬ 
pany. a corporation, party of the third part, witnesseth: 

That whereas parties of the first part and third part, at the time of the execu¬ 


tion hereof as a part of this same transaction, have entered into and executed 
the foregoing and annexed contract or agreement in writing; and 

Whereas under said agreement party of the third part is to loan and advance 
the party of the first part the sum of two hundred thousand ($200,000) dollars 
therein mentioned under the terms and conditions and for the purposes men¬ 
tioned in said foregoing contract; and 

Whereas it is the understanding of all parties hereto that a large part of the 
money so loaned to party of the first part is for the real use and benefit of party 
of the second part in the work of repairing, constructing, and perfecting its 
canals and canal headings in the Republic of Mexico, the said loan being 
entirely made to party of the first part, instead of partly to party of the first 
part and partly to party of the second part, for the reasons and because of the 
fact that party of the second part is a foreign corporation having all of its 
properties in a foreign country, beyond the jurisdiction of the courts of the 
United States, and because of the further fact that the proportions of the said 
loan to be used by party of the first part and by party of the second part can not 
in advance be ascertained or determined; and 

Whereas at the time of the agreeing to the making of said* loan it was agreed 
by party of the second part that it should guarantee the said loan and the 
repayment thereof; 

Now, therefore, in consideration of the premises aforesaid, and in considera¬ 
tion of the entering into and execution of the foregoing contract hereto annexed, 
the said parties of the first and second part do hereby covenant, promise, and 
agree as follows, to wit: 

1. Party of the second part does hereby guarantee the repayment to party of 
the first part of all of said loan, according to the terms, provisions, and condi¬ 
tions of the foregoing and annexed contract; to that end party of the second 
part agrees that all moneys received by .it while said loan remains unpaid, either 
from the sale of its land or water rights, or rights to use water, or from the 
rentals of water, shall be paid as received to party of the first part, to be by it 
used in the work of developing and perfecting and building the second party’s 
said canal and head gates, and in the payment of second party’s indebtedness, 
and in the repayment to party of the third part of said loan and the several 
installments thereof. 

Party of the second part also agrees that it will cause its board of directors 
to elect the president and general manager of party of the first part its gen¬ 
eral manager, and that it will give to said general manager power and 
authority to handle and dispose of its properties in the Republic of Mexico, with 
power to contract and agree to furnish water for use on lands in Mexico at a 
rental of not less than fifty (50) cents gold per acre-foot of water delivered. 

2. As between parties of the first and second parts, there shall he kept regular 
books of account showing the amounts of money advanced or paid out by party 
of the first part for party of the second part, and the amounts of money received 
by it belonging to or for party of the second part; party of the third part, how¬ 
ever, in no way to he concerned with the mutual accounts as between parties of 



40 


IMPERIAL VALLEY OR SALTON SINK REGION. 


tlie first and second part, that being a matter entirely between them and for 
their adjustment from time to time in the regular course of their mutual business 
and intercourse, party of the third part being concerned only that the receipts 
and returns from the sales and rentals of the property of party of the second 
part shall be set aside, as hereinabove provided, as security for the betterment 
and protection of its canals and canal system, the payment of its debts, and the 
payments of the debt and loan to party of the third part. 

In witness whereof the several corporations parties hereto have hereunto 
caused their corporate names and seals to be hereunto affixed by their proper 
officers thereunto duly authorized. 

[seal.] The California Development Company, 

By F. G. Blaisdell, President. 

By W. T. IIeffernan, Secretary. 

La Sociedad de Yrrigation y Terrenos de la 
Baja California (Sociedad Anonima), 

By William T. Heffernan, Presklent. 

By A. J. Flores, Secretary. 

Southern Pacific Company, 

By E. E. Calvin, Vice-President. 

By C. B. Seger, Assistant Secretary. 


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General view of break in west bank of river looking upstream toward the abandoned bed of the river. August 26, 1906. 


















View of one of the attempts made to close break in west bank of Colorado River in Mexico. 

















Temporary closure of break in west bank of Colorado River 4 miles south of international boundary, November 13, 1906, looking northerly along 
tracks of Southern Pacific Company, Colorado River on the right, closed channel on left, 14 feet below level of river. 
























Temporary closure of break in west bank of Colorado River from lower side, looking toward site of destroyed Rockwood gates. 






















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Result of deep cutting from overflow of Colorado River; banks 40 to 60 feet in height; channel 1,000 to 1,500 feet wide, destroying 

cultivated fields. 













Distant view of falls resulting from overflow of west bank of Colorado River. Falls about 
1,500 feet wide and 40 to 60 feet in height, cutting back upstream at the rate of about 
one-third mile per day. 



Nearer view of falls shown above. 









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Deep channel resulting from progress of falls upstream through cultivated fields. 





















































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Erosion of cultivated fields and destruction of farm. 













Ruins of the town of Mexicala by channel made by overflow from west bank of Colorado River, destroying farms and homes. 


















































































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